Please help I am taking a test. Need answers asap!
You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D_1 = $1.75; P_0 = $62.50; g = 7.00 % (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock? 11.25 % 10.64% 9.95% 8.85% 11.14% Which of the following statements is CORRECT? If a company assigns the same cost of capital to all of its projects regardless of each project s risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject. Higher flotation costs tend to reduce the cost of equity capital. Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is riskier than equity, and thus the after-tax cost of debt is always greater than the cost of equity. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes. Because no flotation costs are required to obtain capital as retained earnings, the cost of retained earnings is generally lower than the after-tax cost of debt. Cooley Company's stock has a beta of 0.70, the risk-free rate is 225%, and the market risk premium is 5.50%. What is the firm's required rate of return? 7.26% 5.37% 5.06% 6.10% 5.61% Which of the following statements is CORRECT? The current yield on Bond A exceeds the current yield on Bond B; therefore, Bond A must have a higher yield to maturity than Bond B. If a bond is selling at a discount, the yield to call is a better measure of return than is the yield to maturity. On an expected yield basis, the expected current yield will always be positive because an investor would not purchase a bond that is not expected to pay any cash coupon interest. On an expected yield basis, the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss. If a coupon bond is selling at par, its current yield equals its yield to maturity, and its expected capital gains yield is zero