B) A firm has common stock with a market price of $125 per share. The firm recently paid a dividend of share. The growth rate of the firm's dividends has ne growth rate of the firm's dividends has been steady at 5 percent per year. Hence, the cost of the fi retained earnings is a) 8.20 percent b) 8.36 percent c) 0.08 percent d) 5.03 percent would be the cost of retained earnings for the North Dakota Pipeline (NDP) if the expected return on U.S. reasury Bills is 3.00%, the rate of return from investment in sps0 index is 18.00 percent, and NDP's beta is 0.97 a) 16.5% b) 672% c) 58.5% d) 21.9% 171 What would be the cost of a new common stock issue for Pell Core if the firm's latest dividend was 3 per share the stock price is currently $90.00 per common share dividends are expected to grow af 3 percent per thereafter, and the new common stock flotation and underpricing costs total 55 per share a) 6.43% b) 6.6496 c) 6.53% d) 6.33% 18) A firm has determined its cost of each source of capital and the optimal capital structure: Sources of capital After-tax cost, % Long-term debt Preferred stock Common stock Target market proportions, % 40 10 SO 12 Given this information, the weighted average cost of capital is_ a) 11.33 percent b) 34 percent c) 11.50 percent d) 15 percent and risk 19) Generally, when a firm borrows less, its rate of retum a) decreases; increases b) decreases; decreases c) increases, increases d) increases; decreases 20) A firm has $300,000 in EBIT and a tax rate of 40 percent. The firm has an after-tax cost of debt of 5 percent and a cost of equity of 15 percent. The firm's target capital structure is 40 percent debt and 60 percent equity. Assuming this mix represents the optimum capital structure for the firm, the value of the firm is a) $1.8 million b) $2.7 million c) $1.6 million d) $16.4 million