What is the required rate of return on tangshan stock

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Problem 1: Tangshan China's stock is currently selling for $160.00 per share and the firm'sdividends are expected to grow at 5 percent indefinitely. Assuming Tangshan China's most recent dividend was $5.50, what is the required rate of return on Tangshan's stock?

A) 8.6%

B) 10.6%

C) 7.3%

D) 9.5%

Problem 2: The before- tax cost of debt for a firm which has a 40 percent marginal tax rate is 12 percent. The after- tax cost of debt is

A) 12 percent.

B) 7.2 percent.

C) 4.8 percent.

D) 6.0 percent.

Reference no: EM132944250

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