1. The current risk-free rate of return is 3.5% and the market risk premium is 4%. If the beta coefficient associated with a firm’s stock is 1.7, what is the stock’s required rate of return?
2. Stock X is expected to pay a dividend of $3.00 at the end of the year. The dividend is expected to grow at a constant rate of 6% a year. The stock currently trades at a price of $50 a share. Assume that the stock is in equilibrium. Which of the following statements is most correct?
3. Karsted Air Services is now in the final year of a project. The equipment originally cost $24 million, of which 85% has been depreciated. Karsted can sell the used equipment today for $6 million, and its tax rate is 40%. What is the equipment's after-tax salvage value? Round your answer to the nearest dollar. Write out your answer completely. For example, 13 million should be entered as 13,000,000.