2. The before-tax cost of debt, which is lower than the after-tax cost, is used as the component cost of debt for purposes of developing the firm's WACC. a. True b. False (1 Point) a b 3. Preferred stock is a hybrid--a sort of a cross between common stock and a bond--in the sense the clindandicatoare Hi Mohammad, when you submit this form, the owner will be able to see your name and email address. 1. The corporate valuation model cannot be used unless a company pays dividends. a. True b. False (1 Point) a 3. Preferred stock is a hybrid--a sort of a cross between common stock and a bond-in the sense that it pays dividends that normally increase annually like a stock but its payments are contractually guaranteed like interest on a bond. a. True b. False (1 Point) a b 4. The cost of common equity obtained by retaining earnings is the rate of return the marginal stockholder requires on the firm's common stock. True b. False (1 Point) a. a b 5. Firm A is expected to pay a dividend of $1 at the end of the year. The required rate of return is 5. Firm A is expected to pay a dividend of $1 at the end of the year. The required rate of return is rs = 10%. Other things held constant, what would the stock's price be if the growth rate was 5%? $XX (3 Points) Enter your answer 6. Firm B has a 12% ROE. Other things held constant what would its expected growth rate be if it paid out 30% of its earnings as dividends? X.XX% (3 Points) Enter your answer 7. If D1 = $2.00. g = 7%, and PO = $40, what is the stock's expected dividend yield