Made two announcements concerning common stock

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Reference no: EM131940586

1. BeBe has made two announcements concerning its common stock today. First, the company announced that the next annual dividend will be $2.50 a share. Secondly, all dividends after that will decrease by 1% annually. What is the value of this stock if the discount rate is 14%?

$20.98 $15.45 $13.23 $16.67 $22.22

2. Rekall? Inc., the memory implant? company, has 7 million shares of common stock outstanding and? 100,000 semiminus−annual bonds. The bonds have 6 years to? maturity, a? 9.05% coupon rate and a face value of? $1,000 each. The common stock currently sells for? $29.94 and just paid a dividend of? $2.50. Dividends are paid annually and are expected to grow in perpetuity at? 3%. The bonds sell for? 94% of face value and have a? 10.42% yield to maturity. The afterminus−tax cost of debt is? 7.294%, and the cost of equity is? 11.6%. What is? Rekall's WACC?

A. ?11.24% B. ?9.51% C. ?9.94% D. ?7.09% E. ?10.27%

Reference no: EM131940586

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