What is the expected rate of return for a stock that is expected to pay $1 dividend next year and is currently selling for $10? The price of the stock next year is expected to be $10.84. Write your answer as a decimal (i.e. do not change to a percent). So if the answer is 5.2%, write the decimal equivalent of 0.052.

What is the dividend next year for a stock that currently pays a $2 dividend, which is growing at 8%?

Suppose General Foods has decided to enter the soda business and they will require additional capital. Management will finance the project by borrowing $100 million and by halting dividend payments. Management forecasts that free cash flow for the next two years will be -$50, and $35 million. After year 2, the cash flows will grow at a rate of 4%. The current WACC for General foods is 11.3%. What is the firm's price per share given there are 50 million shares outstanding?

General Foods is forecasted to have a beta (measure of market risk) of 1.2 next year. The risk-free rate over the next year is expected to be 1%. The return on the market is expected to be 8%. What is the required return of General Foods based on the firm's market risk? Calculate the return using the capital asset pricing model.