b) 48) The current price (Po) of a stock that currently pays (D.) Rs 10 as dividend that is expected to grow at 10% constantly with 14% equity cost of capital is Rs.... a) 10/(0.14-0.1) 10(1+0.1)?/(0.14-0.1) c) 10(1+0.1)/(0.14-0.1) d) 10(1+0.170.14-0.1) e) 10(1+0.1)/(0.1-0.14) 49) The price of the above stock after 2 years is Rs........... a) 10(1+0.1)/(0.14-0.1) b) 10(1+0.1)/(0.14-0.1) c) 10(1+0.1)?/(0.14-0.1) d) 10(1+0.1)*(0.14-0.1) e) 10(1+0.1)/(0.14-0.1) 50) The price of a stock that currently pays Rs 2 as dividend & grows at 10% this year and 20% in the following year after which it grows constantly at 5% with K= 12% is Rs.......... a) P3/1.122+D/1.122+D;/1.12 b) P2/0.122+D2/0.122+D,/0.12 c) P,/0.122+D3/0.122+D/0.12 d) P2/0.122+D2/0.122+D./0.12 e) P2/0.122+D/0.122+D,/0.12 COST OF CAPITAL 51) When interest rate is 9% and the tax rate is 40% then the after tax cost of debt is........ % a) 16.8 b) 4.2 c) 19.2 d) 5.4 e) 7.2 f) 4.5 g) 4.8 52) The cost of preferred stock that currently sells at Rs 120 with Rs 10 flotation cost and pays annual dividend of Rs 20 is ............% a) 20/(110+20) b) 20/(120-10) c) 20/(110-20) d) 20/(120+10) e) 20/(100-10) 53) The cost of common stock using DCF method when D, is Rs 10 and grows at 8% constantly and stock sells at Rs 80 with Rs 20 flotation cost is % a) {10/(80-20)} -0.08 b) {10(1.08)/(80-20)} - 0.08 c) {10(1.08)/(80-20)} + 0.08 d) {10(1.08)/(80-20) - 0.08 e) {10(1.08) (80-20)} - 1.08