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6. Which one of the following transactions will most likely lead to an increase in...

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6. Which one of the following transactions will most likely lead to an increase in frim growth? a. b. c. Stock split Decrease payout ratio Change exchange listing 1 7. A firm just paid a dividend of $2.26 per share, which is expected to remain the same for the foreseeable future. According to the dividend discount model, if an investor requires 4% return, the intrinsic value for this security is closest to: a. 2.35 b. 56.5 c. 223 8. The required rate of return used in equity valuation should be influenced least by which of the following? a. b. c. Expected business risk The standard deviation of past returns. The historical risk premium. 9. 11. Aardvark Engineering has an expected return on equity of 11%, a retention rate of 45%, and a required rate of return of 16%. Recent earnings were $1.85 per share and the growth rate is expected to be constant for the foreseeable future. The price of Aardvark's common stock is closest to a. $9.68 b. $9.04 c. $8.95 10 Roaster Ovens generated a return on equity of 18% last year, and a payout ratio of 25%. Which of the following is closest to the estimated growth rate? a. b. c. 4.50% 13.50% 16.50%

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