a. 9.0% w/o tax b. 12.6% c. 8.6% d. 12.0% e. 5.9% w/ tax 8. Sand Point Corporation's common stock recently paid a dividend of $1.16. Investors require a 16% rate of return on this stock. Sand Point earns a 30% return on equity. The rm pays 60% of its earnings as dividends, and reinvests 40% of earnings in the rm. What is the value of the stock? a. $7.25 b. $21.65 c. $8.12 d. $29.00 e. $32.48 9. Pickwick Corporation common stock currently sells for $50 per share. The rm recently paid a dividend of $4.42 per share. Analysts have forecast that earnings and dividends will grow at an average annual rate of 8% per year. Flotation costs for new external equity are $4.25 per share. What is the company's cost of external equity? a. 20.11% b. 18.43% c. 17.55% d. 16.25% e. 15.32% 10. Your rm has estimated the following cash ows for a capital investment project. The rm's required rate of return is 10%. What is the project's payback period? Cash Flow $185,000 at time 0 55,000 at year 1 55,000 at year 2 55,000 at year 3 45,000 at year 4 45,000 at year 5 45,000 at year 6 a. 4.5 years b. 4.0 years c. 3.5 years d. 3.0 years e. 2.5 years 11. Highland Industries has a target capital structure of 60% common equity, 10% preferred stock, and 30% debt. The cost of retained earnings is 15%, and the cost of a new stock issue is 17%. The rm anticipates having $24 million in retained earnings available over the coming year. a. 11.9% b. 13.1% c. 12.8% d. 12.0% e. 14.0%