Questions (1-2) are based on the information that follows Net earni sera constant dividend growth form are currently $60 million and expected to grow over on a policy out a constant 30% of earnings as dividends. Shares outstanding are 5 million RM= 12.5% and RRF-5%. The firm's cost of capital is 17.5% and is expected to be unchanged for the indent 2. What should be the expected dividend yield on the stock? (a) 12.5% (b) 7.5% (c) 17.5% (d) 9.5% (e) cannot be determined based on the information given. a Question 3 3. A preferred stock has just paid a dividend of $3.5. The risk-free rate is 5% and the market rate of retums 15. The has an estimated beta of 1.5. It has a constant dividend payout ratio and the constant rate of growth of its dividends is 0% (expected to contin forever). What price should you pay for the stock right now? (a) $63.12 (b) $46.28 (c) $17.50 (d) $53.99 (e) $41.80