II) D-2 11) Rylan Industries is expected to pay a dividend of $5.40 year for the next four years. If the current price of Rylan stock is $32.89, and Rylan's equity cost of capital is 15%, what price would you expect Rylan's stock to sell for at the end of the four years? A) 585.57 B) $24.45 C) $55.01 D) $30.56 12) 12) Gremlin Industries will pay a dividend of $1.75 per share this year. It is expected that this dividend will grow by 7% per year each year in the future. The current price of Gremlin's stock is $22.40 per share. What is Gremlin's equity cost of capital? A) 14% B) 15% C) 19% D) 17% 13) A company has stock which costs $41.50 per share and pays a dividend of $2.50 per share this year. The company's cost of equity is 10%. What is the expected annual growth rate of the company's dividends? A) 7.96% B) 15.92% C) 3.98% D) 11.94% 14, Two mutually exclusive investment opportunities require an initial investment of S5 million Investment A pays $2.0 million per year in perpetuity, while investment B pays $1.4 million in the first year, with cash flows increasing by 5% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent? A) 17% B) 4% C) 8% D) 18%