2. Your company, RMU Inc., is considering a new project whose data are shown below. What is the project's Year 1 cash flow? [Hint: OCF = EBIT + DEPR TAXES]

Sales revenues $22,250

Depreciation $8,000

Other operating costs $12,000

Tax rate 53.0%

a. $8,903

b. $9,058

c. $9,463

d. $9,746

e. $10,039

2. A company has projected sales of $542,000, costs of $389,300, depreciation of $82,400, and a tax rate of 31%. What is the operating cash flow? A. $104,193 B. $126,518 C. $128,798 D. $130,907 E. $152,700
3. Big O Company has $7 dividend on its preferred stock outstanding that sells for $68 a share. What is Teri's cost of preferred stock? A. 9.52 % B. 9.71 % C. 10.29 % D. 10.78 % E. 11.76 %
4. Given the following information, what is the average annual dividend growth rate? [Hint: find the growth rate from one year to the next year and compute the average]

5. Year	2001	2002	2003	2004	2005	2006
   Dividend	$2.50	$2.60	$2.65	$2.78	$2.89	$3.05

   A. 3.0% B. 3.8% C. 4.1% D. 4.6% E. 5.4%

6. The market value of Gum Inc.'s debt is $200 million and the total market value of the firm is $600 million. The cost of equity is 15%, the cost of debt is 8%, and the tax rate is 34%. What is this firm's WACC? A. 11.14% B. 11.76% C. 12.25% D. 12.67% E. 14.07%
7. Greyhound Company has a $9 dividend on preferred stock outstanding currently selling for $52 a share. What is the companys cost of preferred stock? A. 10.84 % B. 11.25 % C. 12.64 % D. 16.68 % E. 17.31 %
8. The term used to indicate the percentage (proportion) of financing derived from equity and the percentage derived from debt is:

9. A. Capital structure. B. Weighted average cost of capital. C. Market rate of return. D. Book value weights. E. Market to book ratio