Question 30. An all-equity firm has a beta of 1.10. The market risk premium is 6.2 percent, and the tax rate is 21 percent. The firm just issued its annual dividend of $5.05 per share and announced that future dividends will increase by 5.5 percent annually. The stock sells for $41.25 per share. What is the cost of equity?

Multiple Choice

6.05%

17.74%

12.23%

18.42%

12.90%

Question 31. Assume $1 will buy Can$1.3155 while $1.0203 will buy 1. What is the Canadian dollar/euro exchange rate?

Multiple Choice

Can$1.0267 = 1

Can$1.3422 = 1

Can$1.2893 = 1

Can$.7756 = 1

Can$.3219 = 1

Question 33.

An item costs SKr 989.90. Assume the firm can exchange SKr1 for $.1402 and 1 for $1.1806. How much will the identical item cost in euros if absolute purchasing power parity exists?

Multiple Choice

117.55

144.88

163.85

211.99

133.33