Show all your work! Final answers without supporting work will receive a O mark. Problem #1 (6 marks) Felix Furniture has the following bond issue outstanding, each making semiannual interest payments. If the corporate tax rate is 35%, what is the after-tax cost of the company's debt? Coupon Rate Maturity 15 years Bond 1 Price Quote 97.25 6.80% Problem #2 (5 marks) The expected market return is 12%, and T-bills are currently yielding 2%. Thompson transportation has a beta of 1.2. The company's next dividend is expected to be $2 per share, and dividends have been growing at an annual rate of 1.3%. If the stock sells for $25 per share, what is the average of the company's cost of equity? Problem #3 (16 marks) Below is the balance sheet (book value) for JP Products Inc. (JPP). The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are 1,000 common shares and 100 preferred shares outstanding. Bonds are currently selling for $935.80 and have 10 year to maturity. $1,000 Assets Cash & short term securities Accounts Receivable Liabilities and Owners Equity Bonds, coupon =8%, $10,000 paid semi-annually Preferred stock (par $2,000 value $20 per share) Common Stock $10,000 $3,000 $7,000 Inventories ch Problem #2 (5 marks) The expected market return is 12%, and T-bills are currently yielding 2%. Thompson transportation has a beta of 1.2. The company's next dividend is expected to be $2 per share, and dividends have been growing at an annual rate of 1.3%. If the stock sells for $25 per share, what is the average of the company's cost of equity