24. Sabrina's just paid an annual dividend of $1.79 per share. This dividend is expected to increase by 2.5 percent annually. Currently, the firm has a beta of .87 and a stock price of $31 a share. The risk-free rate is 4.5 percent and the market rate of return is 11.8 percent. What is the cost of equity capital for Sabrina's? A. 8.27 percent B. 8.43 percent C. 9.63 percent D. 10.86 percent E. 11.07 percent

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25. The Inventive Co. is considering a new project. This project requires an initial cash investment of $70,000. The project will generate cash inflows of $10,500 in the first year. Then, the project will do nothing for two years, after which time cash inflows of $25,000 will be generated for four years. How long will it take the Inventive Co. to recover its $70,000 investment?

A. 5.16 years B. 5.38 years C. 6.11 years D. 6.62 years E. 6.94 years

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26. Mountain Minerals pays a constant annual dividend. One year ago, when you purchased shares of that stock at $40 a share, the dividend yield was 6.5 percent. Over this past year, the inflation rate has been 3.2 percent. Today, the required return on this stock is 9.8 percent and you just sold all of your shares. What is your total real return on this investment?

A. 31.87 percent B. 29.43 percent C. 26.67 percent D. 25.48 percent E. 23.09 percent

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27. Dennis wants to determine if the discount rate really makes any difference in the net present value of a project. He feels that if a project is acceptable at one rate of return, it will be acceptable at all rates of return. To explain why his thinking is incorrect, you are creating an example to illustrate your point. The cash flows you are using are as follows: time zero is -$71,000, years 1 through 4 are $17,500 each, and years 5 and 6 are $22,500 each. The net present value at a discount rate of 12 percent is _____ as compared to _____ at 17 percent.

A. $4,668.80; $10,325.14 B. $4,920.72; $2,730.89 C. $5,098.31; $62.64 D. $6,319.92; $3,959.52 E. $13,660.64; $4,256.82