Finance Review

|1. For a typical firm, which of the following is correct? All order are after taxes, and assume the firm operates at its scar capital |
| twist. (rd= rate on debt; re= rate on equity (ROE), rs= rate on companys stock, WACC= weighted average damage of capital) |
| |
|  (Points : 4) |
|      [pic]rd > re > rs > WACC. |
|      [pic]rs > re > rd > WACC. |
|      [pic]WACC > re > rs > rd. |
|      [pic]re > rs > WACC > rd. |
|      [pic]WACC > rd > rs > re.



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|2. You were hired as a consultant to Keys Company, and you were provided with the following data: Target capital structure: 40% debt, 10% |
|preferred, and 50% common equity. The after-tax cost of debt is 4.00%, the cost of preferred is 7.50%, and the cost of retained earnings is |
|11.50%. The firm pass on not be issuing any new stock. What is the firms WACC?...If you exigency to get a full essay, order it on our website: Orderessay



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