1. What are the components of the cash flow of a mortgage loan? Please use bullet to list them.
2. Fama's Llamas has a weighted average cost of capital of 9 percent. The company's cost of equity is 14 percent, and its pretax cost of debt is 8 percent. The tax rate is 38 percent. What is the company's target debt-equity ratio?
3. Torch Industries can issue perpetual preferred stock at a price of $74.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.