QUESTION $1$

Village Idiot stock is expected to be priced at $$294\mathrm{.}36$ in $1$ year, pay a dividend of $$8\mathrm{.}91$ in $1$ year, and pay a dividend of $$12\mathrm{.}80$ in $2$ years. The stock has a risk premium of $6\mathrm{.}26\%,$ the risk$-$free rate is $8\mathrm{.}93\%,$ and inflation is expected to be $7\mathrm{.}11\%.$ What is the current price of Village Idiot stock?

$10$ points

QUESTION $2$

If the expected return on the market is $7\mathrm{.}48$ percent, inflation is $2\mathrm{.}11$ percent, the market premium is $4\mathrm{.}26$ percent, and Big Smiles common stock has a beta of $0\mathrm{.}89,$ then what is the expected return for Big Smiles stock? Answer in decimal format, rounded to the nearest hundredth of a percent $($for example, $1\mathrm{.}23\%$ would be entered as $0\mathrm{.}0123).$