1. HighValleyAntiques would like to issue new equity shares if its cost of equity declines to 10.5 percent. The company pays a constant annual dividend of $1.60 per share. What does the market price of the stock need to be for the firm to issue the new shares?
a. $15.24
b. $10.56
c. $17.33
d. $21.77
e. $14.48
2. Walken Industries bonds sell for $890 and have a par value of $1,000. The coupon rate is 6% and the bonds have a maturity of 20 years. If the company is in a 35% marginal tax bracked what is its after tax component cost of debt?
a. 9.98%
b. 6.31%
c. 7.04%
d. 4.58%
e. 8.91%