PROBLEM #$6$

$(10$ Total Points$)$

Frisco Fitness Clubs, a firm in the mature stage of its life cycle, has an expected year$-$end dividend, $D_1,$ of $$4\mathrm{.}80,$ a market price today, $P_o,$ of $$40\mathrm{.}00,$ and a constant growth rate, $g,$ of $5\mathrm{.}0$ percent. The expected return on an average stock in the market, $r_M,$ is $12\mathrm{.}9$ percent, and Frisco Fitness' beta is What is the firm's expected return and risk$-$free rate, $r_{RF}?$

$6$A$.$ What is the stock's expected rate of return today?

$P_1=4\mathrm{.}8$

$P_0=40\mathrm{.}8$

$9=5\mathrm{.}0$