1. Stock in Country Road Industries has a beta of 0.76. The market risk premium is 9 percent, and T-bills are currently yielding 4.5 percent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 5.5 percent annual rate indefinitely. If the stock sells for $35 per share, what is your best estimate of the company's cost of equity.
9.32%
10.83%
7.92%
11.34%
10.32%
2. If you receive a stated annual interest rate of 24 percent compounded quarterly what is your year end wealth on an investment of $1.00? Co x (1 + r/m)^m
A 1.2625
B 1.2400
C 1.0134