as per given Tanner's leather is an all-equity ?nanced ?rm

Subject:AccountingPrice:9.82 Bought3

Share With

as per given

Tanner's leather is an all-equity ?nanced ?rm. The beta is 1.15, the market risk premium is 1.52 percent, the market rate of return is 10.64 percent, and the tax rate is 34 percent. The ?rm announced that the next dividend will be $116364 per share and ?iture dividends will increase by 4 percent annually. The stock sells for $13 a share. 1What is the average cost of equity computed by using the dividend growth model and the CAPM model? A. 10.21% B. 10.56% C. 10.63% D. 9.14% E. 9.93% Question 5 Which of these may occur if a ?rm uses its overall cost of capital as the discount rate for all projects? I. Pro?table low-risk projects may he incorrectly rejected. [1. Only projects with risks similar to the current firm will he accepted. [11. Too many hi gh-risk projects may he accepted. IV. Only low-risk projects will he accepted. A. 11 only E. II and W only C. 1 and [II only D. 1 and W only E. 1, [1, and 111 only