show workings

16. Chevrolet is expected to pay a dividend of $5 in the upcoming year. Dividends are expected to grow at the rate of 6% per year. The risk-free rate of return is 2.7%, and the expected return on the market portfolio is 9.6%. Investors use the CAPM to compute the market capitalization rate on the stock and use the constant-growth DDM to determine the intrinsic value of the stock. The beta of stock is estimated to be 1.4. Using the constant-growth DDM and the CAPM, the price of the stock is Consider the following $1,000 par value zero-coupon bonds: Bond A B D E Years to Maturity 1 2 3 4 5 Yield to Maturity 1.85% 2.20% 3.10% 3.72% 5.01% 17. The expected 1-year interest rate 3 years from now should be