1. Rossdale Co. stock currently sells for $72.65 per share and has a beta of 1.21. The market risk premium is 7.20 percent and the risk-free rate is 2.94 percent annually. The company just paid a dividend of $4.25 per share, which it has pledged to increase at an annual rate of 3.55 percent indefinitely. What is your best estimate of the company's cost of equity?
10.63%
11.45%
9.77%
8.09%
9.36%
2. Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 4.90 percent that sells for $93.10 per share. If the par value is $100, what is the cost of the company's preferred stock?
5.26%
4.90%
5.04%
4.97%
5.70%
3. Upton Umbrellas has a cost of equity of 11.6 percent, the YTM on the company's bonds is 6.2 percent, and the tax rate is 40 percent. The company's bonds sell for 103.2 percent of par. The debt has a book value of $408,000 and total assets have a book value of $952,000. If the market-to-book ratio is 2.74 times, what is the company's WACC?
9.59%
5.46%
8.16%
9.86%
8.27%