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Question 1 The underlying assumption of the dividend growth model is that a stock is worth : A . An amount computed as the next annual dividend divided by the required rate of return . B . An amount computed as the next annual dividend divided by the market rate of return . C . The same amount computed as any other stock that pays the same current dividend and has the same required rate of return . D . The present value of the future income that the stock is expected to generate . E . The same amount to every investor regardless of their desired rate of return .
• Question 2 You plan to invest $ 6,500 for three years at 4 percent simple interest . What will your investment be worth at the end of the three years ? A . $ 6,941.11 B . $ 7,280.00 C . $ 7,311.62 D . $ 6,760.00 E . $ 7,250.00
• Question 3 A firm has a debt-equity ratio of . 64 , a pre tax cost of debt of 8.5 percent , and a required return on assets of 12.6 percent , What is the cost of equity if you ignore taxes ? A . 16.38 % B . 8.55 % C . 15.22 % D . 11.22 % E . 8.06 %