Suppose Rick kish, the president, receives a proposal The amount needed to take a position in the stock is $50 million, it has an expected return of 15%, and its estimated beta is 1.5. Should Kish invest in the new company? At what expected rate of return should Kish be indifferent to purchasing the stock? Comprehensive/Spreadsheet Problem 8-22 EVALUATING RISK AND RETURN Bartman Industries's and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2010-2015. The Winslow 5000 data are adjusted to include dividends. Winslow 5000 Bartman Industries Includes Dividends Year Stock Price 2015 2014 2013 2012 2011 2010 $17.25 14.75 16.50 10.75 11.37 2.62 Dividend $1.15 1.06 1.00 0.95 0.90 0.85 Reynolds Inc. Stock Price Dividend $48.75 $3.00 52.30 2.90 48.75 2.75 57.25 2.50 60.00 2.25 55.75 2.00 $11,663.98 8,785.70 8,679.98 6,434.03 5,602.28 4,705.97 a. Use the data to calculate annual rates of return for Bartman, Reynolds, and the Winslow 5000 Index. Then calculate each entity's average return over the 5-year period. (Hint: Remember, retums are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of retum for 2010 because you do not have 2009 data.)