When a bond has a par or face value of $1,000 and a 6% coupon rate, the semiannual payment would be $60

As the cumulative number of units produced becomes large, the:

A) learning effect is more noticeable. B) learning effect increases. C) learning effect is less noticeable. D) learning effect decreases.

Until now, Delaware East, Inc has been an all-equity firm; its most recent market equity value was $80 mn., and its cost of equity (and cost of assets) is 15%. Now, the firm decides to increase its leverage by issuing $40 mn

in debt, with the proceeds being used to pay a dividend to shareholders. The cost of the debt is rD=7%. What is the firm's new cost of equity capital, according to Modigliani and Miller's Proposition II? a. 15.33% b. 18.20% c 20.33% d. 23.00% FORMULA: rE = rA + (D/E)[rA - rD].