Q7: Formosan Freedom Co. is currently priced at $42.50 per share and it is expected to sell for 6% more next year. The stock will pay an annual dividend per share of $1.10 next year. What is the expected return on this stock?

Q8: Suppose MBI Co. is expected to pay a $0.60 dividend per share next year. Wall Street analysts project the stock will sell for $35.75 in one year. You have been earning 11.5% on your other investments and you believe this one should give you the same return. What is the most you can pay for MBI today in order for you to earn your required return?