The target capital structure for QM Industries is

Question
	
The target capital structure for QM Industries is











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Question 1The target capital structure for QM Industries is
35% common stock, 8% preferred and 57% debt. If the cost of commonequity for
the firm is 17.4% the cost of preferred 9.6% the beforetax cost of debt is 7.5%
and the firm's taxrate is 35% what is QM weighted average cost of capital? Can
you show the steps to solve.



Question 2Crypton Electronics has a capital structure
consisting of 43 % common stock and 57% debt. A debt issue of $1000 par value,
6.5% bonds that mature in 15 years and pay annual interest will sell for $972.
Common stock of the firm is currently selling for $30.09 per share and the
firms expects to pay a $2.29 dividend next year. Dividends have grown at the
rate of 5.4% per year and are expected to continue to do so for the foreseeable
future. What is Crypton's cost of capital where the firm's tax rate is 30%.



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