1. How much would $5,000 due in 25 years be worth today if the discount rate were 5.0%?
a. $1,476.52
b. $1,124.16
c. $1,183.33
d. $1,245.61
e. $1,311.17
2. Bosio Inc.'s perpetual preferred stock sells for $97.50 per share and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?
a. 8.72%
b. 9.08%
c. 9.44%
d. 9.82%
e. 10.22%