1. The following summarizes the costs of treatment of a disease based on four different antibiotics and associated health benefits (effectiveness). Effectiveness is measured as the percent of successful treatment of interventions. Use incremental cost-effectiveness ratios to select the antibiotics that are NOT dominated. You may select more than one antibiotic.
Antibiotic A - Cost of treating 100 patients $1090 - Effectiveness 80%
Antibiotic B - Cost of treating 100 patients $1400 - Effectiveness 90%
Antibiotic C - Cost of treating 100 patients $1060 - Effectiveness 85%
Antibiotic D - Cost of treating 100 patients $1450 - Effectiveness 85%
2. Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent debt. Its cost of equity is 11.5 percent, and the cost of debt is 5.9 percent. The relevant tax rate is 35 percent. What is the company’s WACC?