1. Given the following data; 10-year T-notes = 3.2%, Average S&P return = 12%, Adams Co. stock has a of 1.2, what cost of common from reinvested earnings would Adams use in calculating its WACC?

a. 11.30%

b. 12.33%

c. 13.76%

d. 17.60%

1. Barneys issued non-callable bonds years ago which now have 20 years to maturity. The bonds have par of $1000, an 8.5% annual coupon, paid semi-annually, and currently sell for $1040. If the firms tax rate is 35%, what is the after-tax cost of debt?

a. 4.58%

b. 5.08%

c. 5.26%

d. 5.53%