Gordon growth model . term structure of interest rates . Miller and Modigliani theorem . interest rate risk premium . Fisher effect . 29 . What would be the maximum an investor should pay for the common stock of a firm that has no growth opportunities but pays a dividend of $ 1.36 per year ? The required rate of return is 12.5 percent . 31 . A newspaper listing of bond prices has an " Asked yield " column . This yield is based on the asked price and represents the : coupon rate . difference between the current yield and the yield to maturity . 32 . Mullineaux Corporation has a target capital structure of 65 percent common stock and 35 percent debt . Its cost of equity is 14 percent , and the cost of debt is 8 percent . The relevant tax rate is 30 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 .) 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 .