Market risk premium-what is the company cost of capital

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1. ABC Co. is 40% financed by debt, yielding 10%. The risk free rate is 4%, the expected market risk premium is 7.5%, and the beta of the company’s common stock is .6. The tax rate is 40%. What is the company cost of capital? (round to 1 decimal point) SHOW ALL WORK

2. Baby Claire was born today. Her parents estimate that $100,000 will be needed to pay for her college education, which will begin on her 18th birthday. How much must be invested annually to reach this goal, assuming that the first investment will occur on Claire’s first birthday, and that the account will earn an interest rate of 8% (compounded annually)? $1,239.12 $2,472.42 $2,670.21 $5,555.55.

Reference no: EM131898685

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