Question
1. McCoy paid a one-time special dividend of $3.40 on October 18, 2010. Suppose you bought McCoy stock for $48 on July 18, 2010, ans
1. McCoy paid a one-time special dividend of $3.40 on October 18, 2010. Suppose you bought McCoy stock for $48 on July 18, 2010, ans sold it immediately after the dividend was paid for $63.48. What is your capital gain yield from holding McCoy?
A. 3.93%
B. 32.25%
C. 39.23%
D. 5.9%
2. Verano Inc. has two business division-a software product line and a waste water clean -up product line. The software business has cost of equity capital of 9% and the waste water clean up business has a cost of equoty capital of 5%. Verano has 50% of its revenue from software and the rest from the waste business. Verano is considering a purchase of another company in the waste water business using equity financing. What is the appropriate cost of capital to evaluate the business?
A. 5%
B. 7%
C. 8%
D. 9%
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