Question 5 (14 points)

Company Information	Umbrella Corporation	Wayne Enterprises	Astromech. Company
Beta	0.86	1.44	1.20
Number of common shares outstanding	68,000	62,000	74,000
Current stock price	$21.67	$8.14	$6.40
Long-run growth rate	4.5%	5.5%	5%
EPS	$2.43	$2.68	$1.42
Dividend per share (most recent)	$0.56	$0.44	$0.28
Payout ratio	23%	16%	20%

Market information
Expected return on the market	9%
Government of Canada 10-year bond yield	3%
Annual inflation rate	2%

You have a portfolio made up of the following holdings: 5,000 shares of Umbrella Corporation 2,800 shares of Wayne Enterprises and 8,000 shares of Astromech. Company. Using the information provided:

a. Calculate the required return on your portfolio. (6 points)

b. Calculate whether Umbrella and Astromech stocks are undervalued, overvalued or correctly valued based on the Capital Asset Pricing Model (CAPM). (4 points)

c. What would you expect Umbrella Corporations stock price to be one year from today? (2 points)

d. What would you expect Wayne Enterprises dividend yield to be one year from today? (2 points)

Use 2 decimals for percentages (ex. 5.21%) and for beta (ex. 1.44). Round dollar amounts to the nearest dollar. Show your work