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NEW QUESTION: 1

Additional Data
. The long-term debt was originally issued at par ($1,000/bond) and is currently trading at $1,250 per bond.
. Martin Corporation can now issue debt at 150 basis points over U.S. treasury bonds.
. The current risk-free rate (U.S. treasury bonds) is 7 percent.
. Martin's common stock is currently selling at $32 per share.
. The expected market return is currently 15 percent.
. The beta value for Martin is 1.25.
. Martin's effective corporate income tax rate is 40 percent.
Using the Capital Asset Pricing Model (CAPM), Corporation's current cost of common equity is:
A. 17.00 percent.
B. 15.00 percent.
C. 10.00 percent.
D. 18.75 percent.
Answer: A
Explanation:
Choice "c" is correct. 17.00 percent. Using the CAPM model, Martin's current cost of common equity
would be:
Cost of equity = Capital risk free rate + Beta (market rate risk free rate)
Cost of equity = 7% + 1.25 (15% 7%)
Cost of equity = 7% + 1.25 (8%)
Cost of equity = 7% + 10%
Cost of equity = 17%

NEW QUESTION: 2
A Fibre Channel SAN can include a maximum of 16,384 devices.
A. True
B. False
Answer: B

NEW QUESTION: 3

A. Option B
B. Option A
C. Option C
D. Option D
Answer: D