1- Lightyear, Inc. has 60,000 semi-annual bonds outstanding that are selling at par ($1,000 a bond). The bonds have a coupon of 6.0%. The company has 2.5 million shares of common stock outstanding....

1- Lightyear, Inc. has 60,000 semi-annual bonds outstanding that are selling at par ($1,000 a bond). The bonds have a coupon of 6.0%. The company has 2.5 million shares of common stock outstanding. The common stock has a beta of 1.4 and sells for $62 a share. The U.S. Treasury bill (a proxy for the risk free rate) is yielding 0.8% and the return on the market is 10.0%. The corporate tax rate is 20%. What is the firm's weighted average cost of capital? (You need to calculate the cost of debt, and equity, and the weights of each. Then you can calculate the WACC.)

2- Consider a company with different EBIT for different states of the world: Bad = $15,000; Average = $20,000; and Good = $25,000. The company has 1000 shares outstanding, and each share is valued at $300. The company is considering changing its capital structure to 50% debt which it can secure at 6%. What are the EPS for the company under each state of the world and under each capital structure (there are 6 total EPS)?