8. The growth rate in dividends is a key variable in the Dividend Growth Model for estimating the cost of common equity capital. A company paid a $2.03 dividend per share 10 years ago. Today, it paid a $3.37 dividend per share. The firms Return on Assets is 10%, the Return on Equity is 13%, and the Dividend Payout Ratio is 40%. What is the growth rate using the Retention Ratio Method?

a. 7.8%

b. 6.0%

c. 5.2%

d. 4.0%

9. A corporation has $500,000 excess cash to distribute. The share price is $200 and the firm has 600,000 shares outstanding. Select the correct statement.

a. The corporation could repurchase 2,400 shares.

b. The corporation could pay a $1.20 per share cash dividend.

c. The corporation could repurchase 2,500 shares.

d. The corporation could pay a $2.50 per share dividend.

10. A publicly traded corporation issues additional shares of new common stock. This is referred to as

a. venture capital.

b. an initial public offering (IPO).

c. a perpetuity.

d. a seasoned issue.