Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the Weighted Cost of Capital (WACC) based on two different capital structures under consideration to fund a new project. Assume the company’s tax rate is 30%. Component Scenario 1 Scenario 2 Cost of Capital Tax Rate
Debt $5,000,000.00 $2,000,000.00 8% 30%
Preferred Stock 1,200,000.00 2,200,000.00 10%
Common Stock 1,800,000.00 3,800,000.00 13%
Total $8,000,000.00 $8,000,000.00

5.a fishing rod is formed from a composite material of 0.5 kg of glass fibers embedded in a matrix of 0.5 kg of epoxy resin. the glass fibers are assumed to be long, continuous and unidirectional. to achieve a greater stiffness it is proposed to use a different composite that is comprised of long continuous carbon fibers that will be embedded in a matrix of 0.5 kg of epoxy resin. if the modulus of elasticity of the carbon fiber composite is 10% greater than the elastic modulus of the glass fiber composite, estimate the mass of carbon fibers that will be used to make the carbon fiber composite. assume the applied tensile stress is parallel to the direction of the long axis of the fibers. the epoxy resin, glass fiber, and carbon fiber have an elastic modulus of 5, 86, and 350 gpa respectively and a density of 1100, 2500, and 1800 respectively.