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1. The recommended model to estimate the cost of common equity for a firm is A. the one-stage constant growth model. B. the multistage growth
1. The recommended model to estimate the cost of common equity for a firm is A. the one-stage constant growth model. B. the multistage growth model. C. the capital asset pricing model. D. None of the above 2. Poly's Parrot Shops has found that it's cost of common equity capital is 17 percent. It has 7 years maturity semiannual bonds outstanding with price of 767.03$ that have a coupon rate of 7 percent. The firm is financed with $120,000,000 of common shares (market value) and $80,000,000 of debt. What is the after-tax average cost of capital for Paly's, if it is subject to a 35 percent marginal tax rate? 3. Wally's war Duds has a preferred share issue outstanding with a current price of $26,57.The firm is expected to pay a dividend of 1,86$ per share a year today. What is firm's cost of preferred equity
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