1. You have observed the following returns on ABC's stocks over the last five years:
4.1%, 8.3%, -5.7%, 10.8%, -3.7%
What is the arithmetic average returns on the stock over this five-year period?
2. Yoyo company issued a 33-year non-callable bond, 3 years ago. It pays semi-annual coupons with a coupon rate of 10% and has a current market price of $1,989.86 now. If the firm’s tax rate is 40%, what is the component cost of debt that is used in the WACC calculation?
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