1. Stock in Country Road Industries has a beta of 1.13. The market risk premium is 7 percent, and T-bills are currently yielding 4 percent. The company's most recent dividend was $1.8 per share, and dividends are expected to grow at a 6 percent annual rate indefinitely. If the stock sells for $39 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

9.34%

11.4%

11.91%

10.89%

7.39%

2. The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot-rolled steel was $1.4 million for the first 5 years starting from year 2. An effective energy conservation program resulted in a reduced cost from $1.77 million in year 7 to $1.74 million in year 8, and amounts decreasing by $30,000 each year through year 15. determine the equivalent values listed below at 16% per year.

a) the equivalent annual series of the pumping costs over the last 10 years.

b) the equivalent annual series of the pumping costs from year 3 to 10.

c) Equivalent worth of the project at the end of year 6.

d) the initial cash flow of the equivalent geometric series with increase rate of 15% starting from year 3 and ending in year 20.