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3. Jackson is deciding to purchase shares of Logo, lnc.'s stock with a beta of 1.7. He observes that the market risk premium is 8

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3. Jackson is deciding to purchase shares of Logo, lnc.'s stock with a beta of 1.7. He observes that the market risk premium is 8 percent, and a return on T-bills is 4 percent. Answer questions a), and b). a) What would be his required rate of return on Logo, lnc.'s stock? (5 pts} b) Assume Jackson purchased Logo, Inc., stock for $30 a share and would sell it for $36 a share three years later. Over the next three years he would receive an average annual dividend of $3. Please evaluate the stock performance. (Hint: use the approximate compound yield (ACY) to compare with the required rate of return). (15 pts)

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