The Cracker Mill Has a Beta of 0

question 31

Multiple Choice

The Cracker Mill has a beta of 0.97, a dividend growth rate of 3.2 percent, a stock price of $33 a share, and an expected annual dividend of $1.06 per share next year. The market rate of return is 11.2 percent and the risk-free rate is 3.7 percent. What is the firm's cost of equity?

• A) 7.74 percent
• B) 8.69 percent
• C) 9.30 percent
• D) 9.72 percent
• E) 10.01 percent

---

Definitions:

Omission or Commission

Actions of neglecting something that should be done (omission) or doing something that should not be done (commission), often leading to varying results or consequences.

Immediate Investigation

The prompt examination or inquiry into a situation or issue to swiftly gather facts or evidence.

Tallman Lettering

The practice of using mixed case letters to help distinguish look-alike, sound-alike drugs to reduce medication errors.

Medication Errors

Mistakes in prescribing, dispensing, or administering medication that can lead to harmful effects.