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# Great Expectations

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1. Great Expectations, a wedding and maternity clothing manufacturer, has a cost of equity of 16% and a cost of preferred stock of 14%. Its before-tax cost of debt is 12%, and its marginal tax rate is 40%. Assume that he most recent balance sheet shown here reflects the optimal capital structure. Calculate Great Expectations' after-tax WACC.

2. Babe's Dog Obedience School, Inc., wants to maintain its current capital structure of 50% common equity, 10% preferred stock, and 40% debt. Its cost of common equity is 13%, and the cost of preferred stock is 12%. The bank's effective annual interest rate is 11% for amounts borrowed that are less than or equal to \$1 million and 13% for amounts between \$1 million and \$2 million. If more than \$2 million is borrowed, the effective annual interest rate charged is 15%. Babe's tax rate is 40%. The firm expects to realize \$2,750,000 in net income this year after preferred dividends have been paid.
a. Calculate the MCC if \$900,000 is needed for an upcoming project.
b. Calculate the MCC if \$3,000,000 is needed for the project instead.
c. If a different project is adopted and \$5,005,000 is needed for it, what is the MCC?

3. Calculate the expected rates of return for the low-average-and high risk stocks:
a. Risk-free rate=4.5%
c. Low-risk beta=.5
d. Average-risk beta=1.0
e. High-risk beta=1.6

#### Solution Summary

This solution calculates Great Expectations' after-tax WACC.

\$2.19

## how 19th century healthcare reflected in Dicken's novel, Great Expectations

Thank you for your help. The examples from Oliver Twist help for my comparisons and further understanding.

Can you help with more specifics from Great Expectations though as far as quotes, specifics, detail?

Looking for help as to how was 19th century healthcare reflected in Dicken's novel, Great Expectations?

I am looking for detailed examples, comparisons, quotes from the book.

Please let me know if more time is needed or if more credits.

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