1. If it were unlevered, the overall firm beta for Wild Widgets Inc. (WWI) would be 1.1. WWI has a target debt/equity ratio of 1. The expected return on the market is 0.17, and Treasury bills are currently selling to yield 0.03. WWI one-year bonds (with a face value of $1,000) carry an annual coupon of 3% and are selling for $978.88. The corporate tax rate is 31%.(Round your answers to 2 decimal places before the percentage sign. (e.g., 10.23%))
a. WWI’s before-tax cost of debt is _____%.
b. WWI’s cost of equity is ____%.
c. WWI’s weighted average cost of capital is ____ %.
2. The AUD/USD spot exchange rate is AUD1.60/USD and the CHF/USD is CHF1.25/USD. The AUD/CHF cross exchange rate is:
a. 0.7813
b. 2.0000
c. 1.2800
d. 0.3500