Rejected based on the IRR method

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Reference no: EM132039583

1. Microsofts stock is currently trading at $66.00. The stock will pay a dividend of $5.00 and dividends are expected to increase by 4.50% thereafter. What is the cost of equity for microsoft based on the dividend growth model?

A) 12.08%

B) 12.42%

C) 10.87%

D) 11.11%

E) 12.32%

2. Even if a project is accepted based on the DPB method, it may be rejected based on the IRR method.

A) True

B) False

3. Based on the CAPM, if the risk free rate increases, the expected return on a stock with a beta of 0 increases.

A) True

B) False

Reference no: EM132039583

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