1. Martin Corporation's common stock is currently selling for $50 per share. The current dividend is $2.00 per share. If dividends are expected to grow at 6 percent per year, then what is the firm's cost of common stock?
A. 10.0%
B. 10.2%
C. 10.6%
D. 10.8%
E. 11.0%
2. The common stock of Anthony Steel has a beta of 1.20. The risk-free rate is 5 percent and the market risk premium (Rm - Rrf) is 6 percent. What is the company’s cost of common stock, rs?
A. 7.0%
B. 7.2%
C. 11.0%
D. 12.2%
E. 12.4%