1. The commonly accepted goal of a publicly-traded MNC is to:
A. maximize after-tax net income.
B. maximize its stock price.
C. both maximize short-term earnings and minimize risk.
D. maximize international sales.
2. Your firm has debt worth $200,000, with a yield of 9 percent, and equity worth $300,000. It is growing at a 5 percent rate, and faces a 40 percent tax rate. A similar firm with no debt has a cost of equity of 12 percent. Under the MM extension with growth, what is your firm's cost of equity, rEL?
A. 9.36%
B. 12.0%
C. 12.8%
D. 13.2%
E. 14.0%