Macrose funds hired you as a consultant to help it estimate


1. Rose Inc.'s stock's expected return is 10% the stock's dividend expected to grow at a constant rate of 6%, and it currently sells for $50 a share. Which of the following statements is CORRECT?

a. the stock price is expected to be $53 a share one year from now.

b. the stock price is expected to be $55 a share on year from now.

c. the current dividend per share is $5.00.

d. the stock's dividend yield is 10%..

2. MacRose Funds hired you as a consultant to help it estimate its cost of capital. You have been provided with the following data: D1 = $1.00; P0 = $20.00; and g = 5% (constant) Based on the DCF approach, what is the cost of common from reinvested earnings?

a. 11.00%

b.15.04%

c. 10.00%

d. 5.00%

please, show me your solution.

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