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Hardy Locks, Inc. common shares sell for $32 per share. The firmexpects to set their next annual dividend at $2 per share and itexpects future dividends to grow at 8 percent per year,indefinitely. The current risk-free rate is 2 percent, the expectedrate on the market is 10 percent, and the stock has a beta of 1.5.Using the constant growth model, the firm's cost of equity is morethan 13.75 percent but less than 14.50 percentSelect one:TrueFalseTall Fences, Inc. has a $4 million ($1000 face value) 10-yearbond issue selling for 107.5 percent of par that carries a couponrate of 7.6 percent, paid semi-annually. As a result, the firm’sbefore-tax component cost of debt is more than 6.75 percent butless than 7.25%Select one:TrueFalseA firm has 70,000 shares of common stock outstanding, 10,000shares of preferred stock outstanding, and 1,000 bonds with amarket value of $994,000. If the common shares are selling for $40per share and the preferred shares are selling for $45 per share,then the weight used for common stock in the computation of theWACC for this firm is less than 67.5 percent but more than 64.5percentSelect one:TrueFalse