1. Jiffy Co. expects to pay a dividend of $3.00 per share in one year. The current price of Jiffy common stock is $60 per share. Flotation costs are $3.00 per share when Jiffy issues new stock. What is the cost of internal common equity if the long-term growth in dividends is projected to be 8 percent indefinitely? Select one:
a. 14 percent
b. 13 percent
c. 15 percent
d. 16 percent
2. Which of the following statements about the internal rate of return (IRR) is true?
a. It is greater than the modified internal rate of return if the discount rate is higher than the IRR.
b. It fully considers the time value of money.
c. It never gives conflicting answers.
d. It has the most conservative and realistic reinvestment assumption.