Phil and Mack are evaluating an investment in TypeCAST. They both believe that next year's dividend will be $1.20 per share and they both agree that the growth rate of dividends will be 2.5% per year. However, Mack believes that the required return for the investment is 12% while Phil believes that it is 19%. What are Phil and Mack's relative valuations of TypeCAST? They both have the same valuation Phil has a lower valuation since he has a higher required return Not enough information to determine Mack has a lower valuation since he has a lower required return The capital structure of Fyfe Manufacturing is made up of 50% equity and 50% debt in market value terms. In a perfect capital market (no taxes, no bankruptcy costs, no financing frictions), if Fyfe issues new bonds and uses the proceeds from the bond issue to repurchase stock, what will be the most likely impact to the cost of equity capital (re) ? re increases re decreases re does not change Not enough information to determine Payton Corp is planning to issue additional shares of stock to pay off debt. The firm has stable cash flows and pays income taxes, so the debt reduction and corresponding loss of interest tax shields is a value-destroying endeavor. When will stock price decrease based on this transaction? When management performance is assessed at the next annual meeting When new shares of stock are issued When equity issue/debt reduction is announced When higher taxes are paid in the future When cash is used to pay off debt