1. To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 10 years to maturity. This bond has a 9.25% annual coupon, paid annually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation?
a. 4.878%
b. 4.126%
c. 4.952%
d. 4.526%
e. 4.231%
2. Assume you can exchange $1 for either €.8031 euro or £.6390. What is the cross-rate between the pound and the euro?
A) £1.0852/€1
B) £.7957/€1
C) £.8356/€1
D) £1.5577/€1
E) £.7519/€1