Calculate the Cost of Common Equity for a company with the following data and estimates:

Todays stock price: $17.00

Constant Retention Rate = 60%

Estimated T+1 Earnings = $2.00/share

Estimated Earnings Growth Rate = 10%

Question 17 options:

17.1%

14.7%

16.0%

10.7%

Which statement is incorrect regarding illiquidity and/or insolvency?

Question 3 options:

The further a company is from being insolvent, the better able it is to handle declines in asset values

Different industries have different norms regarding liquidity and leverage

Bankruptcy occurs when you are deemed illiquid or insolvent

Illiquidity can cause a solvent company to become insolvent