1. Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.10. You believe that dividends will grow at a rate of 14.0% per year for two years, and then at a rate of 10.0% per year thereafter. You expect the stock will sell for $33.83 in two years. You expect an annual rate of return of 25.0% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now?

	$34.03
	$47.03
	$55.69
	$39.71
	$60.28

2. You are considering buying common stock in Grow On, Inc. You have calculated that the firm's free cash flow was $8.40 million last year. You project that free cash flow will grow at a rate of 7.0% per year indefinitely. The firm currently has outstanding debt and preferred stock with a total market value of $20.35 million. The firm has 2.76 million shares of common stock outstanding. If the firm's cost of capital is 21.0%, what is the most you should pay per share for the stock now?

	$70.14
	$23.26
	$64.20
	$43.85
	$15.89

3. Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 24 years, and an annual coupon rate of 12.0%. Flotation costs associated with a new debt issue would equal 6.0% of the market value of the bonds. Currently, the appropriate discount rate for bonds of firms similar to Costly is 13.0%. The firm's marginal tax rate is 30%. What will the firm's true cost of debt be for this new bond issue?

	12.82%
	13.86%
	9.70%
	8.97%
	15.57%