1) Determine the weighted marginal cost of capital for the following from using constant book   weights.
                                                                      Balance Sheet
                                                                  ($ millions)
                    Assets                                                                               Claims
            Current assets   $200                                                   current liabilities     $100
            Net fixed assets   400                                                     long term debt           200
                                                                      Preferred stock         100
                                                                            Common equity         200
                                  -----------                                                                             -------------- 600                                                                                         600

      30-year bonds sale price = $1,000 (face value), 8% coupon, 2% flotation costs.
      Preferred stock sale price = $30/share, $3/share annual dividend, 4% flotation costs.
      Common stock sale price = $10/share, 6%flotation cost.
      The firm’s marginal tax rate is 40%. Next year’s dividend is expected to be 75% per share and the anticipated growth rate in these dividend is 6% per year.

  1) As a financial analyst for the D.Vetter supply company, you have been given the assignment of   determining the company’s cost of capital. Toward that end, the following financial information has been collected
Present Capital Structure
    Source of                               Par Total Book Value Market Value
    Capital                                   ($)                                     ($ Million)
    Debt       1,000 4...