Haulsee Inc

question 31

Multiple Choice

Haulsee Inc. pays no dividend currently but is expected to start paying a small dividend next year. The 5-year old firm has a beta of 1.25 and current earnings of $0.90 per share. The current Treasury bill rate is 6.1% and the market risk premium is 8.8%. Determine Haulsee's cost of equity from retained earnings if the firm's tax rate is 40%.

• A)9.48%
• B)17.1%
• C)14.9%
• D)Cannot determine from the above information

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Definitions:

Aromatic

Refers to organic compounds that contain one or more planar rings of atoms with delocalized pi electrons, exhibiting special stability.

Antiaromatic

Antiaromaticity describes molecules that fail to comply with Huckel's rule, having conjugated pi systems with 4n π electrons that lead to destabilization.

Nonaromatic

Referring to organic compounds that do not have the aromatic stability associated with the delocalized pi electrons in a ring structure.

Aromatic Heterocycles

Rings of carbon atoms containing at least one non-carbon atom (heteroatom) like nitrogen, oxygen, or sulfur, that are stable due to aromaticity, important in many biological molecules and synthetic compounds.