The optimal expense allocation presented in the Personal Finance lecture states that

If you can consistently make abnormal profits using historical information, this would indicate that the weak form of market efficiency holds.

Suppose that your firm has a cost of equity of 18% and a cost of debt of 5%. If the target debt/equity ratio is 0.60, and the tax rate is 30%, what is the firm’s weighted average cost of capital (WACC)?

A firm has expected EBIT of $650, debt with a market value of $2,000 paying an 7.50% annual coupon rate, and an un-leveraged cost of capital of 12%. If the tax rate is 34%, what is the value of the leveraged firm, according to M&M’s proposition I with taxes?

If we assume that the annual return on common stocks are normally distributed, then approximately 99% of the returns will fall within the range _______, if the average historical return is 13.0% with a standard deviation of 20.2%.

If you can consistently make abnormal profits using publicly available information, this would indicate that the semi-strong form of market efficiency holds.

What is the future value at the end of year 4 of the following set of cash flows? Assume an interest rate of 5%. Year                         1                  2                   3               4 Cash Flow            $1,000        -$1,000         $1,500      -$1,500

Suppose that your firm has a cost of equity of 18% and a cost of debt of 7%. If the target debt/equity ratio is 0.60, and the tax rate is 30%, what is the firm’s weighted average cost of capital (WACC) (note: do not round your intermediate calculations)?

Abaco Industries has junk bonds outstanding with an 8% coupon rate (APR) and a market price of $750. If the bonds mature in 4 years and interest is paid semi-annually, what is the YTM (as an APR) of those bonds?

According to ______, firms typically use internal financing before they use debt and equity financing from external markets.