1-A firm has a cost of debt of 5.8percent and a cost of equity of 10.5 percent. The debt–equity ratio is.54. There are no taxes. What is the firm's weighted average cost ofcapital? a-9.32% b-7.38% c-8.85% d-8.17% e-7.97%

2- Gulf Shores Inn is comparing twoseparate capital structures. The first structure consists of 265,000shares of stock and no debt. The second structure consists of 210,000shares of stock and $1.50 million of debt. What is the price per shareof equity? a-$31.17 b-$33.57 c-$28.57 d-$27.27 e-$35.24

3-The Tree House has a pretax cost ofdebt of 6.2 percent and a return on assets of 10.6 percent. Thedebt–equity ratio is .40. Ignore taxes. What is the cost of equity? a-12.98% b-8.84% c-12.76% d-12.36% e-13.48%

4- Room and Board is considering twocapital structures that have a break-even EBIT of $18,000. Theall-equity capital structure would have 13,500 shares outstanding. Thelevered capital structure would have 10,000 shares of stock and $75,000of debt. What is the interest rate on the debt? Ignore taxes. a-5.58% b-7.11% c-6.22% d-6.52% e-5.91%

5- KelsoElectric is an all-equity firm with 51,500 shares of stock outstanding.The company is considering the issue of $350,000 in debt at an interestrate of 8 percent and using the proceeds to repurchase stock. Under thenew capital structure, there would be 32,000 shares of stockoutstanding. Ignore taxes. What is the break-even EBIT between the twoplans? a-$63,385 b-$80,111 c-$45,949 d-$73,949 e-$51,692

6- A firm is considering two differentcapital structures. The first option is an all-equity firm with 37,500shares of stock. The levered option is 25,400 shares of stock plus somedebt. Ignoring taxes, the break-even EBIT between these two options is$52,400. How much money is the firm considering borrowing if theinterest rate is 7.2 percent? a-$210,694 b-$223,088 c-$246,012 d-$234,830 e-$268,377

7- Malkin Corp. has no debt but can borrow at 7.25 percent. The firm’s WACC is currently 13 percent, and there is no corporate tax.

What is the company’s WACC in parts (b) and (c)? (Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e.g., 32.) WACC 15 percent

% 60 percent %

8- Debbie's Cookies has a return onassets of 8.7 percent and a cost of equity of 13.1 percent. What is thepretax cost of debt if the debt–equity ratio is .81? Ignore taxes. a-2.97% b-3.78% c-3.63% d-3.27% e-3.45%