1. The common stock of Fine China sells for $38.42 a share. The stock is expected to pay an annual dividend of $1.80 next year and increase that amount by 4 percent annually thereafter. What is the market rate of return on this stock?

9.13%

8.36%

9.22%

8.69%

9.04%

2. Upland Motors recently paid a $1.48 per share annual dividend. Dividends are expected to increase by 2.5 percent annually. What is one share of this stock worth today if the appropriate discount rate is 14 percent?

$14.16

$12.25

$13.04

$12.87

$13.19

3. A stock had a total return of 9.62 percent last year. The dividend amount was $.70 a share which equated to a dividend yield of 2.39 percent. What is the dividend growth rate?

2.48%

7.23%

4.03%

7.06%

5.48%

4. What is the cost of equity for a firm that has a beta of 1.2 if the risk-free rate of return is 2.9 percent and the expected market return is 11.4 percent?

12.8%

13.1%

13.6%

14.4%

10.8%

5. Enterprise value equals the:

combined book value of debt and equity minus excess cash.

combined market value of debt and equity minus excess cash.

combined market value of debt and equity.

market value of equity minus the market value of debt plus excess cash.

market value of debt plus the book value of equity minus excess cash.

6. The Consolidated Transfer Co. is an all-equity financed firm. The beta is .75, the market risk premium is 7.78 percent and the risk-free rate is 3.84 percent. What is the expected return on Consolidated stock?

9.68%

6.80%

8.22%

8.46%

9.54%