1. An issue of common stock is selling for $57.20. The year end dividend is expected to be $2.32 assuming a constant growth rate of 6%. What is the required rate of return?
A) 10.3%
B) 10.1%
C) 4.1%
D) None of the above
2. Expected cash dividends are $2.50, the dividend yield is 6%, flotation costs are 4%, and the growth rate is 3%. Compute cost of new common stock.
A) 9.00%
B) 9.25%
C) 9.18%
D) 9.44%