CHAPTER 9

THE COST OF CAPITAL

(Difficulty: E = Easy, M = Mediu, a!d T = T"u#$%
Multi&le C$"ice: P'"(les
Easy:
Cost of common stock Answer: d Diff: E
1
. Bouchard Company's stock sells for $20 per share, its last dividend (D
0

!as $1.00, and its "ro!th rate is a constant # percent. $hat is its
cost of common stock, r
s
%
a. &.0'
(. &.)'
c. 11.0'
d. 11.)'
e. 11.#'
Cost of common stock Answer: b Diff: E
2
. *our company's stock sells for $&0 per share, its last dividend (D
0
!as
$2.00, and its "ro!th rate is a constant & percent. $hat is the cost of
common stock, r
s
%
a. +.0'
(. +.2'
c. +.#'
d. +.,'
e. 10.0'
Cost of common stock Answer: e Diff: E
)
. -he .lo(al /dvertisin" Company has a mar"inal ta0 rate of 10 percent.
-he last dividend paid (y .lo(al !as $0.+0. .lo(al's common stock is
sellin" for $,.&+ per share, and its e0pected "ro!th rate in earnin"s
and dividends is & percent. $hat is .lo(al's cost of common stock%
a. 12.22'
(. 12.22'
c. 10.))'
d. +.##'
e. 1#.00'
Chapter 9 - Page 1
WACC with Flotation Costs Answer: a Diff: E
1
. /n analyst has collected the follo!in" information re"ardin"
Christopher Co.3
-he company4s capital structure is 20 percent e5uity, )0 percent
de(t.
-he yield to maturity on the company4s (onds is + percent.
-he company4s year6end dividend is forecasted to (e $0.,0 a share.
-he company e0pects that its dividend !ill "ro! at a constant rate
of + percent a year.
-he company4s stock price is $2&.
-he company4s ta0 rate is 10 percent.
-he company anticipates that it !ill need to raise ne! common stock
this year. 7ts investment (ankers anticipate that the total
flotation cost !ill e5ual 10 percent of the amount issued. /ssume
the company accounts for flotation costs (y ad8ustin" the cost of
capital. .iven this information, calculate the company4s $/CC.
a. 10.11'
(. 12.&#'
c. 10.2,'
d. 1).&&'
e. +.2+'
Medium:
WACC Answer: d Diff: M
&
. / company4s (alance sheets sho! a total of $)0 million lon"6term de(t
!ith a coupon rate of + percent. -he yield to maturity on this de(t is
11.11 percent, and the de(t has a total current market value of $2&
million. -he (alance sheets also sho! that that the company has 10
million shares of stock9 the total of common stock and retained earnin"s
is $)0 million. -he current stock price is $2.& per share. -he current
return re5uired (y stockholders, r
:
, is 12 percent. -he company has a
tar"et capital structure of 10 percent de(t and #0 percent e5uity. -he
ta0 rate is 10'. $hat !ei"hted avera"e cost of capital should you use
to evaluate potential pro8ects%
a. ,.&&'
(. +.))'
c. +.)#'
d. +.,2'
e. 10.#2'
Chapter 9 - Page 2
Cost of common stock Answer: d Diff: M
#
. -he common stock of /nthony :teel has a (eta of 1.20. -he risk6free
rate is & percent and the market risk premium (r
;
6 r
<=
is # percent.
$hat is the company4s cost of common stock, r
s
%
a. 2.0'
(. 2.2'
c. 11.0'
d. 12.2'
e. 12.1'
Cost of common stock Answer: b Diff: M
2
. ;artin Corporation's common stock is currently sellin" for $&0 per
share. -he current dividend is $2.00 per share. 7f dividends are
e0pected to "ro! at # percent per year, then !hat is the firm's cost of
common stock%
a. 10.0'
(. 10.2'
c. 10.#'
d. 10.,'
e. 11.0'
WACC Answer: b Diff: M
,
. / company has determined that its optimal capital structure consists of
10 percent de(t and #0 percent e5uity. .iven the follo!in" information,
calculate the firm's !ei"hted avera"e cost of capital.
r
d
> #'
-a0 rate > 10'
?
0
> $2&
.ro!th > 0'
D
0
> $2.00
a. #.0'
(. #.2'
c. 2.0'
d. 2.2'
e. ,.0'
Chapter 9 - Page 3
WACC Answer: c Diff: M
+
. @ohnson 7ndustries finances its pro8ects !ith 10 percent de(t, 10
percent preferred stock, and &0 percent common stock.
-he company can issue (onds at a yield to maturity of ,.1 percent.
-he cost of preferred stock is + percent.
-he company's common stock currently sells for $)0 a share.
-he company's dividend is currently $2.00 a share (D
0
> $2.00, and
is e0pected to "ro! at a constant rate of # percent per year.
/ssume that the flotation cost on de(t and preferred stock is Aero,
and no ne! stock !ill (e issued.
-he company4s ta0 rate is )0 percent.
$hat is the company4s !ei"hted avera"e cost of capital ($/CC%
a. ,.))'
(. +.)2'
c. +.2+'
d. +.++'
e. 1).1&'
WACC Answer: e Diff: M
10
. Do(son Dairies has a capital structure !hich consists of #0 percent
lon"6term de(t and 10 percent common stock. -he company4s C=B has
o(tained the follo!in" information3
-he (efore6ta0 yield to maturity on the company4s (onds is , percent.
-he company4s common stock is e0pected to pay a $).00 dividend at
year end (D
1
> $).00, and the dividend is e0pected to "ro! at a
constant rate of 2 percent a year. -he common stock currently sells
for $#0 a share.
/ssume the firm !ill (e a(le to use retained earnin"s to fund the
e5uity portion of its capital (ud"et.
-he company4s ta0 rate is 10 percent.
$hat is the company4s !ei"hted avera"e cost of capital ($/CC%
a. 12.00'
(. ,.0)'
c. +.)1'
d. ,.00'
e. 2.#,'
Multiple part:
(The following information applies to the next six problems.)
<ollins Corporation is estimatin" its $/CC. 7ts tar"et capital structure is
20 percent de(t, 20 percent preferred stock, and #0 percent common e5uity. 7ts
(onds have a 12 percent coupon, paid semiannually, a current maturity of 20
years, and sell for $1,000. -he firm could sell, at par, $100 preferred stock
!hich pays a 12 percent annual dividend, (ut flotation costs of & percent
Chapter 9 - Page 4
!ould (e incurred. <ollins' (eta is 1.2, the risk6free rate is 10 percent,
and the market risk premium is & percent. <ollins is a constant6"ro!th firm
!hich 8ust paid a dividend of $2.00, sells for $22.00 per share, and has a
"ro!th rate of , percent. -he firm's policy is to use a risk premium of 1
percenta"e points !hen usin" the (ond6yield6plus6risk6premium method to find
r
s
. -he firm's mar"inal ta0 rate is 10 percent.
Cost of debt Answer: e Diff: M
11
. $hat is <ollins' component cost of de(t%
a. 10.0'
(. +.1'
c. ,.#'
d. ,.0'
e. 2.2'
Cost of preferred stock Answer: d Diff: E
12
. $hat is <ollins' cost of preferred stock%
a. 10.0'
(. 11.0'
c. 12.0'
d. 12.#'
e. 1).2'
Cost of common stock: CAPM Answer: c Diff: E
1)
. $hat is <ollins' cost of common stock (r
s
usin" the C/?; approach%
a. 1).#'
(. 11.1'
c. 1#.0'
d. 1#.#'
e. 1#.+'
Cost of common stock: DCF Answer: c Diff: E
11
. $hat is the firm's cost of common stock (r
s
usin" the DC= approach%
a. 1).#'
(. 11.1'
c. 1#.0'
d. 1#.#'
e. 1#.+'
Cost of common stock: Risk premium Answer: c Diff: E
1&
. $hat is <ollins' cost of common stock usin" the (ond6yield6plus6risk6
premium approach%
a. 1).#'
(. 11.1'
c. 1#.0'
d. 1#.#'
e. 1#.+'
WACC Answer: a Diff: E
Chapter 9 - Page 5
1#
. $hat is <ollins' $/CC%
a. 1).#'
(. 11.1'
c. 1#.0'
d. 1#.#'
e. 1#.+'
(The following information applies to the next three problems.)
@. <oss and :ons 7nc. has a tar"et capital structure that calls for 10 percent
de(t, 10 percent preferred stock, and &0 percent common e5uity. -he firm's
current after6ta0 cost of de(t is # percent, and it can sell as much de(t as
it !ishes at this rate. -he firm's preferred stock currently sells for $+0
per share and pays a dividend of $10 per share9 ho!ever, the firm !ill net
only $,0 per share from the sale of ne! preferred stock. <oss's common stock
currently sells for $10 per share. -he firm recently paid a dividend of $2
per share on its common stock, and investors e0pect the dividend to "ro!
indefinitely at a constant rate of 10 percent per year.
Cost of common stock Answer: c Diff: E
12
. $hat is the firm's cost of common stock, r
s
%
a. 10.0'
(. 12.&'
c. 1&.&'
d. 1#.&'
e. 1,.0'
Cost of preferred stock Answer: b Diff: E
1,
. $hat is the firm's cost of ne!ly issued preferred stock, r
ps
%
a. 10.0'
(. 12.&'
c. 1&.&'
d. 1#.&'
e. 1,.0'
WACC Answer: d Diff: E
1+
. $hat is the firm's !ei"hted avera"e cost of capital ($/CC%
a. +.&'
(. 10.)'
c. 10.,'
d. 11.1'
e. 11.+'
Cost of equit Answer: a Diff: M
20
. /llison Cn"ines Corporation has esta(lished a tar"et capital structure
of 10 percent de(t and #0 percent common e5uity. -he firm e0pects to
earn $#00 in after6ta0 income durin" the comin" year, and it !ill
retain 10 percent of those earnin"s. -he current market price of the
firm's stock is ?
0
> $2,9 its last dividend !as D
0
> $2.20, and its
e0pected "ro!th rate is # percent. /llison can issue ne! common stock
Chapter 9 - Page 6
at a 1& percent flotation cost. $hat !ill /llison's mar"inal cost of
equity capital (not the $/CC (e if it must fund a capital (ud"et
re5uirin" $#00 in total ne! capital%
a. 1&.,'
(. 1).+'
c. 2.+'
d. 11.)'
e. +.2'
WACC Answer: b Diff: M
21
. Dilliard Corp. !ants to calculate its !ei"hted avera"e cost of capital
($/CC. -he company4s C=B has collected the follo!in" information3
-he company4s lon"6term (onds currently offer a yield to maturity
of , percent.
-he company4s stock price is $)2 per share (?
0
> $)2.
-he company recently paid a dividend of $2 per share (D
0
> $2.00.
-he dividend is e0pected to "ro! at a constant rate of # percent a
year (" > #'.
-he company pays a 10 percent flotation cost !henever it issues ne!
common stock (= > 10'.
-he company4s tar"et capital structure is 2& percent e5uity and 2&
percent de(t.
-he company4s ta0 rate is 10 percent.
-he company anticipates issuin" ne! common stock durin" the
upcomin" year.
$hat is the company4s $/CC%
a. 10.#2'
(. 11.22'
c. 11.12'
d. 12.02'
e. 12.&#'
Chapter 9 - Page 7
Fi!a!cial Calculat"' Secti"!
Multi&le C$"ice: P'"(les
Medium:
(The following information applies to the next four problems. Financial
calculator required.)
*ou are employed (y C.-, a =ortune &00 firm that is a ma8or producer of
chemicals and plastic "oods3 plastic "rocery (a"s, styrofoam cups, and
fertiliAers. *ou are on the corporate staff as an assistant to the Eice6
?resident of =inance. -his is a position !ith hi"h visi(ility and the
opportunity for rapid advancement, providin" you make the ri"ht decisions.
*our (oss has asked you to estimate the !ei"hted avera"e cost of capital for
the company. =ollo!in" are (alance sheets and some information a(out C.-.
Assets
Current assets $),,000,000
Fet plant, property, and e5uipment $101,000,000
!otal Assets "#$%&'''&'''
(iabilities and Equit
/ccounts paya(le $10,000,000
/ccruals $+,000,000
Current lia(ilities $1+,000,000
Gon" term de(t (10,000 (onds, $1,000 face value $10,000,000
-otal lia(ilities $&+,000,000
Common :tock 10,000,000 shares $)0,000,000
<etained Carnin"s $&0,000,000
-otal shareholders e5uity $,0,000,000
!otal liabilities and shareholders equit "#$%&'''&'''
*ou check The Wall treet !ournal and see that C.- stock is currently sellin"
for $2.&0 per share and that C.- (onds are sellin" for $,,+.&0 per (ond.
-hese (onds have a 2.2& percent annual coupon rate, !ith semi6annual payments.
-he (onds mature in t!enty years. -he (eta for your company is appro0imately
e5ual to 1.1. -he yield on a #6month -reasury (ill is ).& percent and the
yield on a 206year -reasury (ond is &.& percent. -he e0pected return on the
stock market is 11.& percent, (ut the stock market has had an avera"e annual
return of 11.& percent durin" the past five years. C.- is in the 10 percent
ta0 (racket.
Chapter 9 - Page 8
CAPM cost of equit Answer: b Diff: M
22
. Hsin" the C/?; approach, !hat is the (est estimate of the cost of e5uity
for C.-%
a. 10.10'
(. 12.10'
c. 12.)0'
d. 1&.10'
e. 1&.#0'
After)ta* cost of debt Answer: d Diff: M
2)
. $hat is (est estimate for the after6ta0 cost of de(t for C.-%
a. 2.&2'
(. 1.20'
c. 1.)&'
d. &.01'
e. &.)2'
Wei+hts for WACC Answer: d Diff: M
21
. $hich of the follo!in" is the (est estimate for the !ei"hts to (e used
!hen calculatin" the $/CCC%
a. !
e
> &2.#' and !
d
> 12.1'
(. !
e
> #&.2' and !
d
> )1.,'
c. !
e
> ##.2' and !
d
> )).)'
d. !
e
> #2.,' and !
d
> )2.2'
e. !
e
> 22.1' and !
d
> 22.#'
WACC Answer: e Diff: M
2&
. $hat is the (est estimate of the $/CC for C.-%
a. ,.#&'
(. ,.+2'
c. +.1,'
d. +.2&'
e. +.,)'
Component cost of debt Answer: b Diff: M
2#
. Damilton Company's , percent coupon rate, 5uarterly payment, $1,000 par
value (ond, !hich matures in 20 years, currently sells at a price of
$#,#.,#. -he company's ta0 rate is 10 percent. Based on the nominal
interest rate, not the C/<, !hat is the firm's component cost of de(t
for purposes of calculatin" the $/CC%
a. ).0&'
(. 2.)2'
c. 2.)#'
d. 12.20'
e. 12.2#'
Chapter 9 - Page 9
WACC Answer: a Diff: M
22
. / stock analyst has o(tained the follo!in" information a(out @6;art, a
lar"e retail chain3
(1 -he company has noncalla(le (onds !ith 20 years maturity remainin"
and a maturity value of $1,000. -he (onds have a 12 percent annual
coupon and currently sell at a price of $1,22).,&#1.
(2 Bver the past four years, the returns on the market and on @6;art
!ere as follo!s3
*ear ;arket @6;art
2001 12.0' 11.&'
2002 12.2 22.2
200) 6)., 62.&
2001 20.0 21.0
() -he current risk6free rate is #.)& percent, and the e0pected return
on the market is 11.)& percent. -he company's ta0 rate is )&
percent.
-he company anticipates that its proposed investment pro8ects !ill (e
financed !ith 20 percent de(t and )0 percent e5uity. $hat is the
company's estimated !ei"hted avera"e cost of capital ($/CC%
a. ,.01'
(. +.00'
c. 10.2&'
d. 12.))'
e. 1).11'
Chapter 9 - Page 10
CHAPTER 9
A)S*ERS A)D SOL+TIO)S
Chapter 9 - Page 11
1, Cost of common stock Answer: d Diff: E
-he cost of common stock is3
r
s
> $1(1.0#I$20 J 0.0# > 0.0&) J 0.0# > 0.11) > 11.)'.
2, Cost of common stock Answer: b Diff: E
r
s
>
$&0
$2.00(1.0&
J &' > +.2'.
), Cost of common stock Answer: e Diff: E
r
s
>
$,.&+
$0.+0(1.0&
J 0.0& > 0.1#00 > 1#.00'.
1, WACC with Flotation Costs Answer: a Diff: E
$/CC > !
d
r
d
(1 6 - J !
ce
r
e
. r
d
is "iven > +'. =ind r
e
3
r
e
> D
1
IK?
0
(1 6 =L J "
> $0.,IK$2&(1 6 0.1L J 0.0+
> 0.12&&&#.
Fo! you can calculate $/CC3
$/CC > (0.)(0.0+(0.# J (0.2(0.12&&&# > 10.11'.
&, WACC Answer: d Diff: M
$ei"hts should (e (ased on the tar"et capital structure3 !
d
> 10' and !
e
>
#0'. -he cost of de(t should (e (ased on the yield of 11.11'.
$/CC > 0.#0 (12' J 0.1 (16.1 (11.11' > +.,2'.
#, Cost of common stock Answer: d Diff: M
-he cost of common e5uity as calculated from the C/?; is
r
s
> r
<=
J (r
;
6 r
<=
(
> &' J (#'1.2
> 12.2'.
2
, Cost of common stock Answer: b Diff: M
r
s
>
0 $&
# 0(1.0 0 . 2 $
J 0.0#' > 10.21' 10.2'.
,, WACC Answer: b Diff: M
=ind the cost of common stock3
r
s
> D
1
I?
0
J " > $2(1.0I$2& J 0'9 r
s
> 0.0, > ,'.
=inally, calculate $/CC, usin" r
s
> 0.0,, and r
d
> 0.0#, so
$/CC > (DI/(1 6 -a0 rater
d
J (CI/r
s
> 0.1(1 6 0.1(0.0# J 0.#(0.0, > 0.0#21 #.2'.
+
, WACC Answer: c Diff: M
-he cost of common stock is3 r
s
> D
1
I?
0
J " > $2.12I$)0 J 0.0# > 1).02'.
-he cost to the company of the (onds is the *-; multiplied (y 1 minus the
ta0 rate3
r
d
> *-;(1 6 - > ,.1'(0.2 > &.,,'.
-he cost of the preferred is "iven as +'.
-he !ei"hted avera"e cost of capital is then
$/CC > !
d
(r
d
J !
ps
(r
ps
J !
ce
(r
s

$/CC > 0.1(&.,,' J 0.1(+' J 0.&(1).02' > +.2+'.

10, WACC Answer: e Diff: M
-he firm !ill not (e issuin" ne! e5uity (ecause there are ade5uate
retained earnin"s availa(le to fund availa(le pro8ects. -herefore, $/CC
should (e calculated usin" r
s
.
r
s
> D
1
I?
0
J "
> $).00I$#0.00 J 0.02
> 0.12 > 12'.
$/CC > !
d
r
d
(1 6 - J !
ce
r
s
> (0.#(0.0,(1 6 0.1 J (0.1(0.12
> 0.02#, > 2.#,'.
11, Cost of debt Answer: e Diff: M
-ime line3
0 ? 2 /
rd
= 1 2 ) 1 10 #6month
MNNNNNNNNNNNONNNNNONNNNNNNNONNNNNNNNNONNNPPPNNNNNNNQ
?eriods
?;- > #0 #0 #0 #0 #0
E
B
> 1,000 =E > 1,000
:ince the (ond sells at par of $1,000, its *-; and coupon rate (12
percent are e5ual. -hus, the before"tax cost of de(t to <ollins is 12
percent. -he after"tax cost of de(t e5uals3
r
d,/fter6ta0
> 12.0'(1 6 0.10 > 2.2'.
=inancial calculator solution3
7nputs3 F > 109 ?E > 61,0009 ?;- > #09 =E > 1,0009
Butput3 7 > #.0' > r
d
I2.
r
d
> #.0' 2 > 12'.
r
d
(1 6 - > 12.0'(0.# > 2.2'.
12, Cost of preferred stock Answer: d Diff: E
Cost of preferred stock3 r
ps
> $12I$100(0.+& > 12.#'.
1)
, Cost of common stock: CAPM Answer: c Diff: E
Cost of common stock (C/?; approach3
r
s
> 10' J (&'1.2 > 1#.0'.
11, Cost of common stock: DCF Answer: c Diff: E
Cost of common stock (DC= approach3
r
s
>
$22
$2.00(1.0,
J ,' > 1#.0'.
1&
, Cost of common stock: Risk premium Answer: c Diff: E
Cost of common stock (Bond yield6plus6risk6premium approach3
r
s
> 12.0' J 1.0' > 1#.0'.
1#
, WACC Answer: a Diff: E
$/CC > !
d
r
d
(1 6 - J !
ps
r
ps
J !
ce
r
s
> 0.2(12.0'(0.# J 0.2(12.#' J 0.#(1#.0' > 1).&#' 1).#'.
12
, Cost of common stock Answer: c Diff: E
r
s
>
$10.00
$2.00(1.10
J 0.10 > 1&.&'.
1,, Cost of preferred stock Answer: b Diff: E
r
ps
>
$,0
$10
> 12.&'.
1+, WACC Answer: d Diff: E
20
, Cost of equit Answer: a Diff: M
#alculate the retained earnings brea$ point:
.iven3
Fet income > $#009 De(t > 0.19 C5uity > 0.#9 Dividend payout > 0.#.
Break point
<C
> $#00(1 6 0.#I0.# > $100.
/llison !ill need ne! e5uity capital9 capital (ud"et e0ceeds Break
point
<C
.
%se the di&idend growth model to calculate r
e
:
r
e
>
( )
( ) = 1 ?
" 1 D
0
0

+
J " >
( )
( ) 1& . 0 1 2, $
0# . 1 20 . 2 $

J 0.0#
> 0.0+2+ J 0.0# > 0.1&2+ 1&.,'.
21, WACC Answer: b Diff: M
-he correct ans!er is (, 11.22'. /s there are no retained earnin"s, the
e5uity portion of the capital (ud"et must (e funded usin" ne! common
e5uity.
$/CC > $
d
(r
d
(1 6 - J !
ce
(r
e

> 0.2&(0.0,(1 6 0.1 J 0.2&K($2.00 0 1.0#I($)2(1 6 0.1

J 0.0#L
> 0.2&(0.01,0 J 0.2&(0.1))#
> 0.1122 > 11.22'.
22, CAPM Cost of Equit Answer: b Diff: M
r
s
> &.&' J 1.1(11.&'6&.&' > 12.10'.
2), After)ta* cost of debt Answer: d Diff: M
F>10 7>% ?E>6,,+.&0 ?;->)#.2& =E>1,000
7>1.2
r
d
> 1.2(2 > ,.1'.
r
d
after6ta0 > ,.1'(160.10 > &.01'.
21, Wei+hts for WACC Answer: d Diff: M
Hse market values for estimatin" the !ei"hts, since tar"et values are not
availa(le.
;arket value of e5uity > E
e
> $2.&0(10 million > $2& million.
;arket value of de(t > E
d
> $,,+.&0(10,000 > $)&.&, million.
$
e
> $2&I($2&J$)&.&, > 0.#2, > #2.,'.
$
d
> $)&.&,I($2&J$)&.&, > 0.)22 > )2.2'.
2&, WACC Answer: e Diff: M
$/CC > 0.#2, (12.10' J 0.)22 (&.01' > +.,)'.
2# $/CC > !
d
r
d
(1 6 - J !
ps
r
ps
J !
ce
r
s
> 0.1(#' J 0.1(12.&' J 0.&(1&.&'
> 11.1'.
, Component cost of debt Answer: b Diff: M
-ime line3
0 r
d
> %

1 2 ) 1 ,0
MNNNNNNNNONNNNNNONNNNNNNONNNNNNNONNNPPPNNNNNQRuarters
?;- > 20 20 20 20 20
E
B
> #,#.,# =E > 1,000
=inancial calculator solution3
#alculate the nominal 'TM of bond:
7nputs3 F > ,09 ?E > 6#,#.,#9 ?;- > 209 =E > 1,000.
Butput3 7 > ).0&' periodic rate.
Fominal annual rate > ).0&' 1 > 12.20'.
#alculate r
d
after"tax: r
d,/-
> 12.20'(1 6 - > 12.20'(1 6 0.1 > 2.)2'.
22
, WACC Answer: a Diff: M
$/CC > K(0.2(r
d
(1 6 -L J K(0.)(r
s
L.
a. Hse (ond information to solve for r
d
3
F > 209 ?E > 61,22).,&#19 ?;- > 1209 =E > 1,000.
:olve for r
d
> +'.
(. -o solve for r
s
, !e can use the :;G e5uation, (ut !e need to find (eta.
Hsin" ;arket and @6;art return information and a calculator's
re"ression feature !e find ( > 1.)&,&. :o r
s
> 0.0#)& J (0.11)& 6
0.0#)&(1.)&,& > 0.1)11 > 1).11'.
c. ?lu" these values into the $/CC e5uation and solve3
$/CC > K(0.2(0.0+(1 6 0.)&L J K(0.)(0.1)11L > 0.0,01 > ,.01'.