What is the firm cost of equity

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Reference no: EM132030352

1. A firm paid a recent annual dividend of $1.60 per share and is expected to grow annually by 3% per year. The market price of the stock is $21. What is the firm's cost of equity?

10.62%

7.85%

7.62%

10.85%

2. Two-years ago, Trans-Siberian Airlines sold a $950 million bond issue to finance the purchase of new jet airliners. These bonds were issued in $1000 denominations with an original maturity of 12 years and a coupon rate of 12%. Determine the value today of one of these bonds to an investor who requires a 14% rate of return on these securities.

$626

$463

$897

$270

Reference no: EM132030352

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