1. Which one of the following items is deductible on Schedule A? U.S. federal income taxes withheld. Investment interest expenses. Personal credit card interest. Will preparation fees.
2. XYZ Corporation has an expected growth rate of 5%, the current market price of the stock is $23 per share and the last dividend was $2.00. XYZ has a beta of 0.7. The risk-free rate is 3% and the return on the market is 8%. a) What is the cost of capital using the CAPM? b) How would you reduce the firms cost of equity?