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1. Mountain Teas wants to raise $8.9 million to open a new production center. The company estimates the issue costs for legal and accounting fees will be $510,000. The underwriters have set the stock price at $26 a share and the underwriting spread at 8.35 percent. How many shares of stock does Mountain Teas have to sell to meet its cash need? (Round up to the next whole share.)

A. 428,414 shares

B. 394,897 shares

C. 369,315 shares

D. 392,144 shares

E. 401,909 shares

2. Connolly Co.'s expected year-end dividend is D1 = $6.00, its required return is rs = 11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is Connolly's expected stock price in 7 years, i.e., what is P7?

a. $141.04 b. $141.70 c. $140.71 d. $142.03 e. $141.37

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92765655

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