Problem 1: A company just paid a dividend of $3.00 per share on its stock. The dividends are expected to grow at a constant rate of 5% per year, indefinitely. The current price of the stock is $54. What is the companys cost of equity? You must show your computations to receive full credit.

Problem 2: A company common stock outstanding selling for $57 per share. In a situation where the risk-free rate of investment is 3% and the market risk is 7% and we look up and find the beta of the companys common stock is 1.2, what would be the companys cost of equity? You must show your computations to receive full credit.

Problem 3: A company with an income tax rate of 20% has three sources of its capital: 60% common stock, 5% bonds and 35% preferred stock. The cost/return of each has been computed to be: 8% for the common stock before any taxes, 8% for the bonds before any taxes and 8% for the preferred stock before any taxes. What is the weighted cost of capital for the company? You must show your computations to receive full credit.