Teslazon (ticker TZN) is a new firm that specializes in the sale of highly profitable walls on-line to generate excess free cash flows to (i) subsidize Teslazon web services, (ii) pay regular dividends, and (iii) do share repurchases. Teslazon pays regular dividends of $1 per share each quarter. The price of Teslazon stock was $40 at the beginning of the year. It is expected to be $45 at the end of the year.

a) What is the expected annual rate of return on TZN stock?

b) Why would Teslazon's Board of Directors also authorize share repurchases instead of simply increasing regular dividends?

c) If TZN stock is expected to grow at the rate calculated in a) indefinitely, how long would it take (in years and partial years) to double, assuming annual compounding?

d) Teslazon grows, and its founder Samantha Rider, becomes the richest person in the world. If Teslazon engaged in positive NPV projects, such as acquiring both Amazon and Tesla in hostile takeovers, how could it go about financing these acquisitions? (Hint: discuss retained earnings, debt issuance, and equity issuance and payout policy)

e) How could Teslazon enhance retained earnings by changing payout policy to help finance acquisitions such as those mentioned in d)? What are the costs and benefits of doing so?