1. The stock of Pills Berry Company is currently selling at $95 per share. The firm pays a dividend of $3.10 per share. a. What is the annual dividend yield? b. If the firm has a payout rate of 25 percent, what is the firm’s P/E ratio?
2. Why is there a cost for a company that retains some of their earnings (explain)?
3. What is a reasonable measure for the before tax cost of debt (rd). Why?