7.A stock is expected to pay a dividend of $1 next year, and the dividend is expected to grow 4% a year.If the stock price is $20,

a)what is the dividend yield?(10)

Answer: 5%

b)what is the expected return of the stock?(5)

Answer: $22

c)what is the expected capital gains return?(10)

Answer: 10%

d)what do you expect the stock price to be in 5 years?(5)