General Motors (GM) has a current share price of $25.00, a beta of 1.25, and a dividend yield of 6%. Suppose the Treasury bill yield is 5% and the market portfolio is expected to return 14%. Show work with formulas, not Excel.

a. What is the required rate of return on GM?

b. How much should a share of GM sell for at the end of an investor's 2-year investment horizon assuming the dividends are fixed?

Hint: Note that the dividends discount model cant be used here, because there is no assumption that the dividends will be fixed indefinitely.