1. The Green Balloon just paid its first annual dividend of $0.12 a share. The firm plans to increase the dividend by 3.5 percent per year indefinitely. What is the firm's cost of equity if the current stock price is $6.50 a share?

		5.35 percent
		19.98 percent
		5.41 percent
		14.42 percent
		18.79 percent

Tetra Inc. has 5% coupon bonds outstanding that have a remaining maturity of 8 years. These bonds pay interest semiannually and have a $1000 face value. Currently, these bonds are selling for $940. Tetra Inc. faces a marginal tax rate of 40%. Estimate Tetra's pre-tax cost of debt.

		2.38%
		11.93%
		5.95%
		6.74%
		3.57%