percent rounded to 2 decimal places, e. g., 32.16.) 33. Filer Manufacturing has 8 million shares of common stock outstanding. The current share price is $ 50, and the book value per share is $ 5. The company also has two bond issues outstanding. The first bond issue has a face value of $ 69.4 million and a coupon rate of 6.7 percent and sells for 108.6 percent of par. The second issue has a face value of $ 59.4 million and a coupon rate of 7.2 percent and sells for 108.3 percent of par. The first issue matures in 9 years, the second in 26 years. Suppose the company’ s stock has a beta of 1.3. The risk-free rate is 2.8 percent, and the market risk premium is 6.7 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company’ s WACC?( Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.) 34. A firm’ s WACC can be correctly used to discount the expected cash flows of a new project when that project: will be financed with the same proportions of debt and equity as those currently used by the overall firm. will be financed solely with internal equity. 35. The cost of preferred stock: is set equal to the pretax cost of debt since it is a fixed income security. is ignored by all firms when computing WACC. is generally calculated using the overall firm’ s beta. is equal to the stock’ s dividend yield. should be adjusted for taxes when computing WACC. 36. When computing WACC, you should use the: pretax cost of debt because most corporations pay taxes at the same tax rate. aftertax cost of debt because interest is tax deductible. pretax cost of debt because it is the actual rate the firm is paying bondholders. current yield because it is based on the current market price of debt. pretax yield to maturity because it considers the current market price of debt. 37. All else constant, the net present value of a typical investment project increases when: all cash inflows occur during the last year instead of periodically throughout a project’ s life. each cash inflow is delayed by one year. the initial cost of a project increases. the discount rate increases. the rate of return decreases. 38. Graham and Harvey( 2001) found that _____ were the two most popular capital budgeting methods. IRR and payback IRR and NPV discounted payback and NPV IRR and modified IRR NPV and PI 39. The primary reason that