Haulsee Inc

question 72

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 6.10% and the market risk premium is 8.8%.Determine Haulsee's cost of equity if the firm's tax rate is 40%.

• A)9.48%
• B)17.1%
• C)14.9%
• D)cannot determined from the information provided

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Definitions:

Food Deprivation

A condition where an individual or organism does not consume enough food to meet basic nutritional requirements.

Basal Metabolic

The speed at which the body expends energy to sustain essential activities like breathing and temperature regulation when it is at rest.

Drive-reduction

A theory in psychology that explains motivation as being the result of drives, such as hunger or thirst, that an organism seeks to reduce to maintain homeostasis.

Arousal Theory

A theory of motivation that posits individuals seek to maintain an optimal level of arousal, not too high or too low.