1. A stock is currently priced at $65 per share and will pay a $4 dividend in one year. What must the stock sell for in one year to meet investors' expectations of a 15% after-tax return if dividends are taxed at 28% and there are no capital gains taxes?
2. Seven years ago the Templeton Company issued 17-year bonds with an 12% annual coupon rate at their $1,000 par value. The bonds had an 7% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called.