Question 11 2 pts Consider the following information on a portfolio of three stocks: State of Economy Probability of State of Stock A rate of Return Economy Boom 0.15 0.05 Stock B rate of Return Stock Crate of Return 0.21 0.18 Normal 0.80 0.08 0.15 0.07 Bust 0.05 0.12 -0.22 -0.02 The portfolio is invested 35 percent in each Stock A and Stock B and 30 percent in Stock C. If the expected T-bill rate is 3.90 percent, what is the expected risk premium on the portfolio? 7.72 percent 7.38 percent 6.90 percent 8.68 percent 06.19 percent Question 12 2 pts The Down and Out Co. just issued a dividend of $2.51 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $55 a share, what is the company's cost of equity? (Do not round your intermediate calculations.) 9.3% 9.56% 9.79% 4.8896 10.28% Question 13 2 pts Antonio's is analyzing a project with an initial cost of $37.000 and cash inflows of $28,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt and common stock to finance their operations and maintains a debt-equity ratio of 0.5. The pre-tax cost of debt is 10.8 percent and the cost of equity is 12.9 percent. The tax rate is 34 percent. What is the projected net present value of this project? $33,926.72 $3.723.80 $7.237.52 $10,965.94 $11,535.08 Question 14 2 pts Judy's Boutique just paid an annual dividend of $1.65 on its common stock. The firm increases its dividend by 2.5 percent annually. What is the rate of return on this stock if the current stock price is $38.20 a share? 7.37 percent 6.93 percent 7.54 percent 8.19 percent 8.33 percent