1. What is CTC’s cost of capital? Assume CTC’s marginal tax rate is 25%
Cost Of Debt: 6.1%
Cost of Common Stock: 11.88%
Cost of Preferred Stock: 7.5%
Growth rate: 5.21%
Share Price: 25.3
Market Value of common stock: 82,225,000
2. Assume S = $31.75, div = 0, r = 0.03, and sigma (volatility) = 0.20, and 90 days until the expiration of a standard call option. A put on call compound option with an exercise price of $2.00 has 180 days until expiration. What is the premium of the put on call option?
A) $0.42
B) $0.48
C) $0.85
D) $1.11