1. Parole Co. has 77,984 bonds outstanding that are selling at par value. The bonds yield 8.8 percent. The company also has 4.1 million shares of common stock outstanding. The stock has a beta of 1.33 and sells for $48.9 a share. The U.S. Treasury bill is yielding 3.7 percent and the market risk premium is 7.4 percent. Parole's tax rate is 36 percent. What is the firm's weighted average cost of capital? Enter answer in percents.
2. Last week, Onboard Co. has announced that the next two annual dividends will be in the amount of $2.4 and $3.6, respectively. After that, the dividends will increase by 3.09 percent annually. The required return on this stock is 12.6 percent. What is the current price per share? (Hint: draw this out on a timeline.)