1. Maxwell Electromagnetics just paid its first annual dividend of $.41 a share. The firm plans to increase the dividend by 5.3 percent per year indefinitely. What is the firm's cost of equity (in percents) if the current stock price is $19 a share?
2. The 10.9 percent preferred stock of Avogadro Numerics is selling for $46 a share. What is the firm's cost of preferred stock if the tax rate is 33.7 percent and the par value per share is $100?
3. If you are offered $20,000 now or $30,000 in ten years' time, which should you accept, and why, given a fixed annual interest rate of 4.5% (assuming you would invest the $20,000)?