Investors require an after-tax rate of return of 11% on their stock investments. Assume that the tax rate on dividends is 30% while capital gains escape taxation. A firm will pay a $2 per share dividend 1 year from now, after which the firm's stock is expected to sell at a price of $18.

a.	Find the current price of the stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Current price

$

b.	Find the expected before-tax rate of return for a 1-year holding period. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Before-tax rate of return

%

c.	Now suppose that the dividend will be $3 per share. If the expected after-tax rate of return is still 11% and investors still expect the stock to sell at $18 in 1 year, at what price must the stock now sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price

$

d.	What is the before-tax rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Before-tax rate of return