1. The beta for the equity in Enough Corporation is 0.95. The market risk premium is 7 per cent, and the risk-free rate is 5 per cent. Enough has a target debt/equity ratio of 25 per cent. Its cost of debt is 9 per cent, before taxes. If the tax rate is 30 per cent, what is the WACC?
2. On 11 May 2010, Chase Manhattan had an issue of preference shares that traded for $80 per share. If the face value of the issue was $100 per share, the dividend was $7.60 and the tax rate was 39 per cent in 1990 and it is now 30 per cent. What is Chase Manhattan's cost of preference shares?