8-15A. (Common stockholder expected return) In October 2003, Michael, Inc. was expecting ro pay an annual dividend of$1.12 in 2004. The firm's stock was selling for $49. The stock's beta is 1.10.

a. What is Michael, Inc.'s dividend yield?

b. Based on the Ibbotson Associates data presented in Chapter 6 (Table 6-1, p.. 183), compute the expected rate ofreturn for this stock. (Use the CAPM approach described in Chapter 6.)

c. What growth rate would you have to use in the multiple-period valuation model to get the same expected return as in part (b)?