1.Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent...

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1.Rollins Corporation is estimating its WACC. Its target capitalstructure is 20 percent debt, 20 percent preferred stock, and 60percent common equity. Rollins' beta is 1.6 , the risk-free rate is3 percent, and the market risk premium is 5 percent. Rollins is aconstant-growth firm which just paid a dividend of $2.00, sells for$ 29 per share, and has a growth rate of 4 percent. The firm'spolicy is to use a risk premium of 3 percentage points when usingthe bond-yield-plus-risk-premium method to find r_s. Thefirm's marginal tax rate is 33 percent.
What is Rollins cost of equity when using the CAPM approach?Express your answer in percentage (without the % sign) and round itto two decimal places.
2.A company's balance sheets show a total of $ 25 millionlong-term debt with a coupon rate of 12 percent. The yield tomaturity on this debt is 8.72 percent, and the debt has a totalcurrent market value of $ 32 million. The balance sheets also showthat that the company has 10 million shares of stock; the total ofcommon stock and retained earnings is $30 million. The currentstock price is $7.5 per share. The current return required bystockholders, r_s, is 12 percent. The company has atarget capital structure of 40 percent debt and 60 percent equity.The tax rate is 40%. What weighted average cost of capital shouldyou use to evaluate potential projects? Express your answer inpercentage (without the % sign) and round it to two decimalplaces.

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1.Rollins Corporation is estimating its WACC. Its target capitalstructure is 20 percent debt, 20 percent preferred stock, and 60percent common equity. Rollins' beta is 1.6 , the risk-free rate is3 percent, and the market risk premium is 5 percent. Rollins is aconstant-growth firm which just paid a dividend of $2.00, sells for$ 29 per share, and has a growth rate of 4 percent. The firm'spolicy is to use a risk premium of 3 percentage points when usingthe bond-yield-plus-risk-premium method to find rs. Thefirm's marginal tax rate is 33 percent.What is Rollins cost of equity when using the CAPM approach?Express your answer in percentage (without the % sign) and round itto two decimal places.2.A company's balance sheets show a total of $ 25 millionlong-term debt with a coupon rate of 12 percent. The yield tomaturity on this debt is 8.72 percent, and the debt has a totalcurrent market value of $ 32 million. The balance sheets also showthat that the company has 10 million shares of stock; the total ofcommon stock and retained earnings is $30 million. The currentstock price is $7.5 per share. The current return required bystockholders, rs, is 12 percent. The company has atarget capital structure of 40 percent debt and 60 percent equity.The tax rate is 40%. What weighted average cost of capital shouldyou use to evaluate potential projects? Express your answer inpercentage (without the % sign) and round it to two decimalplaces.