The dividends per year for PepsiCo

are in the chart below. On January 14, 2011 the price for the stock was

$ 66.78$66.78.

Use these payments to find the annual dividend growth rate. Then, find the required rate of return for this stock, assuming the future dividend growth rate will remain the same and the company has an infinite horizon. Does this return seem reasonable for

PepsiCoPepsiCo?

Year	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Dividend	$0.555	$0.575	$0.595	$0.630	$0.850	$1.010	$1.160	$1.425	$1.650	$1.775	$1.890

1. What was the annual dividend growth rate for stock?

_______%

(Round to two decimal places.)

2. What was the estimated annual required return for PepsiCo's stock?

_________%

(Round to two decimal places.)Did this return seem reasonable for PepsiCo?

(Select the best response.)

A.

Yes

B.

No