If a firm just paid a dividend equal to $4.00 a share

If a firm just paid a dividend equal to $4.00 a share, then for the WACC, in order to find the cost of equity, $4 should be: (Points : 1)divided by the current price of the stock, and the quotient should be added to the dividend growth rate.divided by the current price of the stock.multiplied by one minus the tax rate, and the difference divided by the current price of the stock.multiplied by the sum of one plus the growth rate, and then divided by the current price of the stock; this quotient should be added to the dividend growth rate.Question 2. 2. Which of the following statements regarding the cost of debt is true? (Points : 1)The cost of debt for bonds equals the coupon rate of outstanding bonds.The cost of debt for bonds is found by dividing the price by the annual coupon.The cost of debt for bonds is found by calculating their yield to maturity.The cost of debt equals the flotation costs charged by investment bankers who advise the firm.Question 3. 3. Using the Capital Asset Pricing Model, estimate the required rate of return for Caterpillar Incorporated stock if the company’s beta is 1.87 (as of February 1, 2013). Use a risk-free rate of 3% and a market risk premium of 6%. (Points : 1)8.61%11.22%14.22%16.83%Question 4. 4. Which of the following statements regarding business risk, financial risk, and investors’ risk, is true? (Points : 1)Business risk is very similar to the risk of bankruptcy and is closely linked to the amount of debt in a firm’s financing mix.Financial risk is associated with the returns earned by equity investors.Business risk is often measured by the variability of earnings before depreciation and taxes and is closely associated with the risk inherent in the goods and services a business is selling.Investment risk is the uncertainty associated with a firm’s investment projects. It can be thought of as the likelihood that the expected IRR or NPV from an investment project will not materialize.Question 5. 5. One reason why we are not concerned with idiosyncratic risk (also called firm-specific risk) is that: (Points : 1)most risk is not firm-specific, so we can ignore it.through hedging and insurance, investors may now invest in stocks with almost no risk exposure of any kind.it is easy and almost costless to diversify one’s portfolio and eliminate idiosyncratic risk.investing in bonds can offset the idiosyncratic risks of shares of stock.Question 6. 6. Which of the following is beta is used for? (Points : 1)estimating a regression lineestimating a firm’s total risk to be used in the WACCestimating a firm’s market risk and used with the CAPMestimating the amount of leverage used by the firmQuestion 7. 7. Total risk is measured by: (Points : 1)the standard deviation of returns.the firm’s beta.Moody’s, Standard & Poor’s, and Fitch ratings.the variability of EBIT.Question 8. 8. If an investor purchases a share of stock for $300, collects a dividend during the year equal to $35 a share, and sells the stock at the end of the year for $289, what is the investor’s return for the year? (Points : 1)12.11%8.30%8.00%15.33%Question 9. 9. The financing mix reflected in the WACC should: (Points : 1)reflect the desired mix and not necessarily the mix being used to finance a specific project.vary from project to project, depending on how they are financed.always reflect the firm’s current capital structure.None of these answers is correct.Question 10. 10. Chapter 9 discusses three different types of returns. Identify the item in the list below that is NOT one of those three types of returns. (Points : 1)the actual rate of returnthe expected rate of returnthe risk-free rate of returnthe required rate of return