Suppose a firm has been earning a return on equity (ROE) of 13 percent and retaining 60 percent of its earnings (i.e. its dividend payout ratio is 40 percent). If this situation is expected to continue indefinitely, what would be a reasonable estimate of g, the company's future growth rate in dividends? a. 2.6% b. 14.4% O c. 7.8% d.5.2% O e. 13.0% QUESTION 3 The Yerby Company's currently outstanding bonds have a 10.9 percent coupon and a 12.7 percent yield to maturity. Yerby believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 45 percent, what is Yerby's after-tax cost of debt? a. 10.90% b.6.99% c. 6.00% d. 4.91% O e. 12.70%