Happy companys stock trades at $62 , and pays a divided of $1.26/ share (2.03 yield) and it has an unlevered beta of 1.07, tax rate of 21%, and 795,000 shares outstanding. Also it has $24 million in long term debt yielding 6.5%. book value of its equity is the same as market value. Moreover, an economist at universal securities has just release her annual assessment. of the market risk premium, and said that for major US equities, the market return is 5.5% greater than risk free rate of 2.75%

A. what rate of return do Happy company shareholders expect over the next 12 months?

B. Assume that share holders actually expect a 12%annual return. (its different than part A) further assume that the equity analysts expects the price of share of happy company stock to reach $68 one year from now. what divided share per share would Happy company need to pay to satisfy that equity return goal?