1. Buchanan Corp. Is refunding $8 milloion worth of 12% debt. The new bonds will be issued for 8%. The corporation's tax rate is 36%. The call premium is 10%. What is the net cost of the call premium?
2. Lucas, Inc. earned $14 million last year and retained $8 million. Lucas has 9 million shares outstanding, and the current price of Lucas shares is $35 per share. What is the payout ratio? (Round your answer to the nearest whole percent.)
3. Preferred stock of Slow But Sure Inc., pays annual dividends of $1.50. These dividends are expected to continue into the indefinite future. What is the REQUIRED RATE OF RETURN ON THIS STOCK IF THE Sure's preferred stock if the required return on this stock is $17.5.