Hello - i need help with questions 7 - 13 on the attached document. I've also pasted the questions in here. Please let me know how many credits to answer all questions.

1. 7.SCorporation?scommonstockhasabetaof.83.Theinterestrateon10yearU.S.Treasurybondsis3.4percent,andtheinterestrateon1yearU.S.Treasurybillsis1.18percent.Assuminganaveragemarketriskpremiumof5.0percent,usethemean-variancecapitalassetpricingmodeltoestimatethecostofexistingcommonequityforSCorporation.

1. 8.Mark Inc. is a privately held company, so there is no information about beta available. However, a company in the same business with a debt to equity ratio the same as that of Mark Inc. is publicly traded and has a beta of 1.25. If the risk-free rate is 3.8 percent, and the average market risk premium is 5.5 percent, what is the estimated cost of existing equity for Mark Inc.?

1. 9.If a company has a beta of 1.8 and is considering a low risk project outside its normal course or business with a beta of 1.25, what beta should the company use? The 1.25 or the 1.8? Why?

1. 10.A company is operating in three areas of the economy (sectors or industries) and the divisional betas are presented below:

• Beta Value

Division A .75 $200,000

Division B 1.05 $800,000

Division C 1.60 $500,000

What is the company?s beta?

1. 11.Foe Corporation?s has the capital structure given below:

Debt (at market value) $2,000,000

Preferred stock (at market value) $600,000

Common stock (at market value) $ 3,000,000

Assuming the market weight are also the target weights for Foe Corp. please calculate the weights that should be used to find the weighted average cost of capital for Foe Corp.

1. 12.For the problem above, if the after tax cost of debt is 6% the cost of preferred stock is 8% and the cost of common stock is 10%, what is the weighted average cost of capital?

13.Kay Corporation has a marginal cost of capital schedule as follows:

Weighted average Cost

First $1 million pool of money 12%

Second $2 million pool of money 13%

Amounts above $3 million 15%

The company is considering the following assets:

Net Present Value at WACC of

Asset Cost IRR 12% 13% 15%

A $1,000,000 17% $400,000 $350,000 $250,000

B 900,000 16 200,000 190,000 150,000

C 600,000 15 200,000 180,000 0

D 500,000 14 100,000 40,000 -50,000

E 500,000 13.8 150,000 60,000 -170,000

F 500,000 13.5 80,000 70,000 -160,000

In which assets should the company invest( in which order)?