QUESTION 1

A stock is selling for $50 in the market. the required rate of return is 9%. the most recent dividend paid is 2.0 and dividends are expected to grow at a constant rate. whats the expected dividend yield for this stock

a 4.00% b 4.19% c 5.0% d 9.0%

QUESTION 2

You were hired as a consultant to a company, whose target capital structure is 40% debt, 10% preferred, and 50% common equity. The before tax cost of debt is 6.0%, the cost of preferred is 8.0%, and the cost of retained earnings is 13.0%. the corporate tax rate is 28%. the firm will not be issuing any new stock. what is WACC

a 8.72% b 9.02% c 9.88% d 10.15

QUESTION 3

To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 15 years to maturity.This bond has a 10.25% annual coupon, paid semiannually, sells at a price of $1,025, and has a par value of $1,000.If the firm's tax rate is 30%, what is the component cost of debt for use in the WACC calculation?

a 5.96% b 6.23% c 6.98% d 6.51%

QUESTION 4

According to non constant dividend growth model , the expected dividend growth rate during the initial growth period is different from the expected dividends growth rate during the subsequent constant growth period

TRUE OR FALSE

QUESTION 5