31 . The cost of preferred stock is equal to the preferred stock dividend:
　　A)   divided by its par value.
　　B)    divided by the market price.
　　C)    multiplied by the market price.
　　32 . The audit committee of a company’s Board of Directors is most likely to act in the interests of shareholders when:
　　A)   a company officer other than the CEO controls the audit budget.
　　B)    a reliable communication “firewall” is in place between the committee and the company’s internal auditors.
　　C)    the committee has authority to prevent the company from engaging in non-audit business relationships with its external auditors.
　　33 . Rosalie Woischke is an executive with ColaCo, a nationally known beverage company. Woischke is trying to determine the firm’s optimal capital budget. First, Woischke is analyzing projects Sparkle and Fizz. She has determined that both Sparkle and Fizz are profitable and is planning on having ColaCo accept both projects. Woischke is particularly excited about Sparkle because if Sparkle is profitable over the next year, ColaCo will have the opportunity to decide whether or not to invest in a third project, Bubble. Which of the following terms best describes the type of projects represented by Sparkle and Fizz as well as the opportunity to invest in Bubble?
　　Sparkle and Fizz    Opportunity to invest in Bubble
　　A)   Independent projects      Add-on project
　　B)    Independent projects      Project sequencing
　　C)    Mutually exclusive projects   Project sequencing
　　Which of the following factors is least likely to affect business risk?
　　A)   Demand variability.
　　B)    Interest rate variability.
　　C)    Operating leverage.
　　34 . A company has the following data associated with it:
　　§    A target capital structure of 10% preferred stock, 50% common equity and 40% debt.
　　§    Outstanding 20-year annual pay 6% coupon bonds selling for $894.
　　§    Common stock selling for $45 per share that is expected to grow at 8% and expected to pay a $2 dividend one year from today.
　　§    Their $100 par preferred stock currently sells for $90 and is earning 5%.
　　§    The company's tax rate is 40%.
　　Part 2)
　　35 . What is the weighted average cost of capital (WACC)?
　　A)   8.5%.
　　B)    9.2%.
　　C)    10.3%.
　　
　　　　
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