1. Texas Tea's dividend policy calls for the dividend to be increased each year by the same rate. Last year, the company paid a dividend equal to $3.50 per share. This year, after the company initiates a 5-for-1 stock split, Texas Tea expects to pay a dividend equal to $0.73 per share. At what rate does Texas Tea increase its dividend each year? Round your answer to two decimal places.

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2. Last year, Headline News Corporation paid $960,000 in dividends and retained $320,000 of the earnings it generated. The company follows a constant payout ratio dividend policy. If Headline generates $1.68 million in income this year, how much will be paid in dividends? Round your answer to the nearest dollar.

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3. Last year, Absolute Zero Freezers paid a dividend equal to $0.57 per share. Absolute follows the low regular dividend plus extras policy to determine its annual dividend. The policy requires the minimum dividend to be increased by 30 percent of the amount of earnings that exceeds $15,000. Last year's earnings were $25,000. If Absolute has 25,000 shares outstanding, how much is the minimum (low regular) dividend that the firm pays each year? Do not round intermediate calculations. Round your answer to the nearest cent.

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4. Dirty Dogs Grooming's optimal capital structure calls for 20 percent debt and 80 percent common equity. The company's weighted average cost of capital (WACC) is 11 percent if the amount of retained earnings generated during the year is sufficient to fund the equity portion of its capital budgeting requirements, whereas its WACC is 15 percent if new common stock must be issued. Dirty Dogs has the following independent investment opportunities:

Project A: Cost	=	$747,600; IRR = 16%
Project B: Cost	=	$720,000; IRR = 14%
Project C: Cost	=	$730,000; IRR = 10%

If Dirty Dogs expects to generate net income of $840,000 and it pays dividends according to the residual policy, what will its dividend payout ratio be? Round your answer to two decimal places.

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5.BKP plans to initiate a 4-for-1 stock split. BKP's stock currently sells for $240 per share. What will be the stock price immediately after the split takes place? Round your answer to the nearest cent.

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