The common stock of the Gooseberry Corporation , which sells for \$45 , will pay a $1.50 dividend one year from now. The company dividends are expected to grow at a constant rate 8% indefinitely . What is the cost of common stock ? Select one :

a. 11.79%

b. 11.33 %

C.11.51\%

d. 11.60\%

Which of the following statements is INCORRECT? Select one: O

a. The best financial structure is determined by finding the debt and equity mix that maximizes the corporate cost of capital

b. Cost of a particular source of capital debt, preferred stock, common stock, is equal to the investors required rate of return after adjusting for the effects of corporate taxes.

C. Cost of debt decreases due to the tax deductibility of interest

d. A firm financed completely with equity capital has a cost of capital equal to the required return on common stock

Which of the following statements is CORRECT? Select one :

a. The value of a bond is the present value of both the future coupon payments and the face value of the bond.

b. The value of a bond is directly related to changes in the yield-to-maturity on the bond.

c. The yield-to -maturity on the bond varies from investor to investor because each investor has his or her own required return

d. If bond has a market value that is HIGHER than its face value, then it is a DISCOUNT bond.

Which of the following statements is INCORRECT Select one:

A. The Capital Asset Pricing Model may be used to estimate the cost of equity

b. The after tax cost of equity equals one minus the tax rate times the required rate of return on common stock c. A with a reasonably stable price will have a lower required rate of return than a security with an unstable price .

D. The cost of is already on an after-tax basis since dividends to common stockholders are not tax deductible