Use the information provided to calculate the required rate of return on four stocks. Use both CAPM and the Dividend Discount Model.

12/31/2018 12/31/2017 12/31/2016 12/31/2015
Revenue
Total Revenue 51,728,000 57,902,000 56,519,100 56,488,000
Cost of Revenue 23,502,000 25,340,000 25,399,800 25,283,000
Gross Profit 28,226,000 32,562,000 31,119,300 31,205,000

Operating Expenses 12/31/2018 12/31/2017 12/31/2016 12/31/2015
Selling General & Administrative 19,184,000 20,706,000 21,225,600 20,736,000
Operating Income or Loss 9,042,000 11,856,000 9,893,700 10,469,000

Income from Continuing Operations 12/31/2018 12/31/2017 12/31/2016 12/31/2015
Other Income/Expenses Net -1,148,000 -1,507,000 -1,508,400 -2,256,000
Interest Expense 1,220,000 1,288,000 1,207,800 853,000
Income Before Tax 6,674,000 9,061,000 7,177,500 7,360,000

Four Stock Examples

	Smith Company, Inc.	Competitor 1	Competitor 2	Competitor 3
Beta	1.4	1.7	1.2	0.9
Dividend	$2.00	$3.25	$2.00	$1.25
Price	$26.00	$33.00	$45.00	$20.00
Growth	3.5%	3.5%	5.5%	1.5%

Income Tax Expense 2,696,000 4,130,000 1,956,600 1,708,000
Net Income 3,978,000 4,931,000 5,220,900 5,652,000