A company is planning to issue 50 million shares at the price of $50 per share. It is expected that at the end of one year, the company will pay a dividend of $2.5 per share and the one-year target share price will be $55 per share. (20 marks)

a. What expected rate of return can you declare to potential investors? b. Would you invest in this company if opportunity cost of capital on the project with the same level of risk is equal to 10%? c. What is the opportunity cost of capital is 20%?

Elaborate Thoroughly.