1) Compute the expected return given these three economic states, their likelihoods,and the potential returns (Round your answer to 2 decimal places Omit sign) Economic State Probability Return Fast growth 0 31 48 Slow growth 0 53 17 Recession 0 16 31 2) You have assigned the following values to these three firms Price Upcoming Dividend Growth Beta US Bancorp $ 29 80 $ 3 20 8 80 1 59 Praxair 59 15 1 51 13 00 2 20 Eastman Kodak 36 50 1 00 11 50 0 98 Assume that the market portfolio will earn 15 50 percent and the risk free rate is 5 70 percent Compute the required return for each company using both CAPM and the constant growth model (Do not round intermediate calculations and round your final answers to 2 decimal places Use sign) CAPM US Bancorp Praxair Eastman Kodak Constant Growth Model US Bancorp Praxair Eastman Kodak

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Question: 1) Compute the expected return given these three economic states, their likelihoods,and the potential returns: (Round your answer to 2 decimal places. Omit % sign)

1) Compute the expected return given these three economic states, their likelihoods,and the potential returns:(Round your answer to 2 decimal places. Omit % sign)

Economic State	Probability	Return
Fast growth	0.31	48	%
Slow growth	0.53	17
Recession	0.16	-31

2) You have assigned the following values to these three firms:

	Price		Upcoming Dividend	Growth		Beta
US Bancorp	$	29.80			$	3.20	8.80	%	1.59
Praxair		59.15				1.51	13.00		2.20
Eastman Kodak		36.50				1.00	11.50		0.98

Assume that the market portfolio will earn 15.50 percent and the risk-free rate is 5.70 percent.

Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places. Use % sign)

CAPM

US Bancorp

Praxair

Eastman Kodak

Constant-Growth Model

US Bancorp

Praxair

Eastman Kodak

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