LOLIUS Macros 5 points QUESTION 4 1. Stock A has the following returns for various states of the economy State of the Economy Recession Below Average Average Above Average Boom Probability Stock A's Return 10% -45% 15% -10% 50% 15% 15% 30% 10% 90% Stock A's expected return is 9% 15% c 11% $ 12% points QUESTION 5 4.39 Years 2.77 Years 3.15 Years 5 points QUESTION 20 1. Zeta, Inc has a beta equal to 2.1 and a required return of 15% based on the CAPM. If the market risk premium is 6.5%, the risk-free rate of return is 4.25%. 1.35%. 2.25% 3.50%. 11 5 points QUESTION 21 25. 3.50% 5 points QUESTION 21 1 Teltech Inc. is investing in a major capital budgeting project that will require the expenditure of $10 million. The money will be raised by issuing $4 million of bonds, $4 million of preferred stock, and $2 million of new common stock The company estimates its pre-tax cost of debt to be 7%, its cost of preferred stock to be 9% the cost of retained earnings to be 12%, and the cost of new common stock to be 13%. Teltech's marginal tax rate 21%. The trenghted average cost of capital of this project is closest to? 9.91% 10.24% 8.41% 13.02% span