Adams Inc. is a company that is exactly as risky as an average firm in the market. The current market data is as follows: Risk Free Rate = 5.00%; Market Risk Premium = 6.50%. The company is also expected to pay $1.25 of dividends next year, while the current stock price is $21. What is the firm's cost of common stock?

Group of answer choices

11.50%

11.64%

11.99%

12.35%

12.72%

All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)?

Group of answer choices

A lower capital intensity ratio.

A lower dividend payout ratio.

A higher spontaneous-liabilities-to-sales ratio

A higher profit margin.

An increase in its forecasted sales.