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Problem 1: A company has a beta of 1.24. The market risk premium is expected...

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Problem 1: A company has a beta of 1.24. The market risk premium is expected to be 6.7%, and the current risk-free rate is 2.4\%. What is the cost of equity using CAPM? Problem 2: Calculate the annual cost of debt for the following AAA-rated bond which pays semi-annual coupons. The years left to maturity is 8 years, the coupon rate is 5% and the coupons are paid semi-annually. The face (par) value is $1,000 and the bond currently sells for $1,120. Problem 3: A company consists of 30% debt and 70% equity. The cost of debt is 8% and the cost of equity is 18%. What is the pre-tax cost of capital for this company

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