1. The Giuntoli Co. just issued a dividend of $3.00 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 $43.80 a share, what is the company’s cost of equity?
2. What is the theoretical justification for the Laffer curve? Basing your view on the empirical evidence described in the text, is the approach the Federal government currently regarding tax reform the best one for the country at this time? Support your answer.