1. How successful do you predict these recently proposed extensions will be? Why?
a. Mont-Blanc (famous for pens): fragrances and other accessories (watches, cufflinks, sunglasses and pocket knives)
b. Evian (famous for water): high-end spas
c. Starbucks (famous for coffee): film production and promotion
d. Trump (famous for hotels and casinos): vodka and mortgage services
2. Suppose we have a bond issue currently outstanding that has 25 years left to maturity. The coupon rate is 9%, and coupons are paid semiannually. The bond is currently selling for $908.72 per $1,000 bond. What is the after-tax cost of debt if the tax rate is 35%?
A. 3.25%
B. 5.00%
C. 6.50%
D. 7.75%
E. 10.00%