High Tech US Inc. is expected to pay a dividend of $2 per share at the end of year 1(D1), and the dividends are expected to grow at a constant rate of 4 percent forever. If the current price of the stock is $20 per share, calculate the expected return or the cost of equity capital for the firm (Hint: Use the dividend growth approach).

Group of answer choices:

a) 8%

b) 10%

c)14%

d) 12%

On a common stock, you expect the following dividend payments for the next three years: $1.40, $1.75, and $2.00. After the third year, the dividends are expected to stay constant at $2 (i.e., the growth rate of dividends is 0%). The required rate of return on the stock is 14%. What is the estimated intrinsic value per share? (Hint: Solve this problem like a regular multi-stage DDM problem. In the terminal value formula, simply use 0% for the dividend growth rate).

Group of answer choices:

a) $14.26

b) $13.57

c) $12.92

d) $13.85

You gathered the following data for a company:

• It has $100,000 in bank loans (notes payable) with 9% interest rate
• It has $500,000 in long-term debt with 14% interest rate
• It has equity worth $1,000,000 with an estimated cost of 25%.

What is the weighted average cost of capital (WACC) based on a 30% tax rate?

Group of answer choices:

a) 19.08%

b) 20.45%

c) 17.28%

d) 16.75%