8-7A. (Common stockholder expected l·eturn) Made-It's common stock currently sells for $22.50 per share. The company's executives anticipate a constant growth rate of 10 percent and an endof-

year dividend of $2.

a. What is your expected rate of return if you buy the stock for $22 .50?

b. Ifyou require a 17 percent return, should you purchase the stock?