12. What is the correct formula for B7 to find the cost of retained earnings using the CAPM? a) B5+B4*B6 b)-BI/B3+B2 c) -B3/B1+B2 d) B4 B6+B2 e) B5+B4*(B6-B5) 1 Next Dividend (D.) 2 Dividend Growth Rate 3 Stock Price 4 Beta 5 Risk-free Rate 2.25 $ 35.00 1.15 2.50% 9.00% Expected Market Return 7 Cost of Retained Earnings Solution: 13. Which is the right formula for B7? Year Cash Flows (60,000) 3120,000 25,000 30,000 6 WACC fNPV(B6,B2:B5) g NPV(B6,B3 B5)-B2 i) NPV(B6,B2:B5)+B2 NPV(B6,B2:B5)-B2 Solution: 14. The Internal rate of Return (IRR) in cell B9 will be the Required Return in B7. a) less than b) equal to c) greater than d) Could be any of the above e) None of the above Solution