19. When a firm undertakes a stock split, this will: a. Increase the number of shares outstanding b. Decrease the number of shares outstanding C. Increase the level of retained earnings d. Mean that each investor now owns proportionately more of the firm, other things being equal e. None of the above 20. Sueshe Restaurants plc currently has 50 million shares outstanding trading at 3.00 each, and the firm has just paid a divided of 0.20. Sueshe also has 3 million bonds, which are trading at 105 each with a yield to maturity of 6%. Dividends are expected to grow annually by 5% and Sueshe faces a corporate taxation rate of 20%. What is Sueshe's weighted average cost of capital (WACC)? a. 4.5% b. 7.1% c. 7.9% d. 10.1% e. None of the above 21. Which of the following is not a reason why dividends may be considered irrelevant? a. Investors are able to make homemade dividends b. Firms that retain more earnings may offer greater prospects for price appreciation C. Firms that retain less of their earnings may offer less prospect of price appreciation d. The effective tax rate is lower on capital gains e. None of the above 22. If we allow for taxes, bankruptcy and agency costs, as leverage increases the cost of capital for a firm: a. Increases b. Decreases C. Does not vary with the degree of leverage d. First decreases, then ultimately increases as leverage increases e. None of the above