1. Usethefollowinginformationtoanswerquestions11to13. RiverhawkStore(RS)dividendshavebeengrowingat3percentannuallyandareexpectedtocontinuethisgrowthrateindefinitely.Thecompanyrecentlypaidadividendof$1.25pershare.Nextyear,itexpectstoadd$3milliontoretainedearnings.RPscommonstockissellingfor$17.00pershare.Thecompanyisexpandingandplanstosellnewcommonstockwithflotationcostsof4percent. Whatisthecostofretainedearningsforthecompany?

2. 	11.45%
   	10.67%
   	10.89%
   	10.57%
   	10.27%

3. 2 points

Question 12

1. 1. What is the companys cost of new equity?

      	11.45%
      	10.57%
      	10.67%
      	10.27%
      	10.89%

2. 2 points

Question 13

If 30 percent of the equity needed is new equity and the rest will be retained earnings, what is the average cost of equity funds?

	11.45%
	10.27%
	10.57%
	10.89%