1. Assuming that Plaza Metals raised $2,500,000 from the following: 

$1,200,000 in common stock and its opportunity cost was 5.8%,

 $800,000 in loans with an interest rate of $7.5%, and

 $500,000 Preferred shares at a cost of 6.75% 

What is the Reference Average Cost of Capital WACC?

a. 0.0518

b. 163350

c. 0.0653

d. 129600

e. 0.653

2. If zone company has the following data:

Asset turnover: Sales/total assets =2.7

Financial leverage: total assets/equity=2.8

ROS: net income/sales= 5.8%

Dividend retention: 2/3

What is g*?

a. 0.1044

b. 0.292

c. 7.184

d. 0.052

e. 14.37

3. If Plaza Company has a ten-month put option on Zone Company, with an execution price of $60. Suppose the stock price was $50.50 on the day the option expires. What is the gain or loss if the option premium is $3.50?

a. 9.5$ profit

b. 9.5$ loss

c. 6$ profit

d. 6$ loss

Answer rating: 100% (QA)

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