The Down and Out Co. just issued a dividend of $2.76 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $35 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)

Multiple Choice

• 12.62%

• 13.94%

• 13.28%

• 8.42%

• 12.89%

Fama's Llamas has a weighted average cost of capital of 11 percent. The company's cost of equity is 15.5 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 32 percent. What is the company's target debt-equity ratio? (Do not round your intermediate calculations.)

Multiple Choice

• 0.8966

• 0.8621

• 1.8

• 0.819

• 0.9052

Stock in Country Road Industries has a beta of 1.21. The market risk premium is 9 percent, and T-bills are currently yielding 4.5 percent. The company's most recent dividend was $1.8 per share, and dividends are expected to grow at a 7.5 percent annual rate indefinitely. If the stock sells for $33 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

Multiple Choice

• 11.85%

• 13.36%

• 14.38%

• 9.95%

• 15.39%