1. If a firm’s debt-to-equity ratio is 3, what is the weighted average cost of capital for the firm if the required rate of return on equity is 12.1 percent and after tax cost of debt is 7.4 percent?
2. A used car dealer tells you that if you put $2000 down on a particular car, your monthly payments will be $199.08 for 4 years at an interest rate of 9%. Assuming, what is the cost to you of the car?
3. C.Lo’s dividend is expected to grow at 8% for the next 4 years, 6% for one year and then at 3% forever. If the current dividend is $4 and the required return is 10%, what is the price of the stock?