8-15B. (Common stockholder expected return) In October 2003, Dorothy Corp. was expecting to pay an annual dividend of$1.20 in 2004. The firm's stock was selling for $54. The stock's beta is 0.90.

a. What is Dorothy Corpo's dividend yield?

b. Based on the Ibbotson Associates data presented in Chapter 6 (Table 6-1, p. 183), compute the expected rate of return 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)?