1. Grand River Corp. has a debt-equity ratio of 1 and a tax rate of 40 percent. The firm has no preferred stock. The cost of equity is 14 percent and the pretax cost of debt is 7 percent. What is the weighted average cost of capital? A. 8.46 percent B. 8.79 percent C. 9.10 percent D. 9.45 percent E. 9.82 percent
2. Sunny Land Inc. has 750,000 shares of preferred stock pay a $2.8 annual dividend per share, and sell for $40 per share. What is the cost of preferred stock? A. 5.60 percent B. 5.75 percent C. 6.25 percent D. 6.75 percent E. 7.00 percent.