Please answer part B

The Constant-Growth-Rate, Discounted Dividend Model, given in Equation 9.5 (textbook, p. 247) says that P₀ = D₁ /(kg).

1. Re-arrange the terms to solve for k, the discount rate, also known as the required rate of return. Hint: start by cross-multiplying, and then divide both sides by P₀.

To solve for k, 1. Multiply both sides by (k g) to get: P₀ (k g) = D₁ 2. Divide both sides by P₀ by to get: (k g) = D₁ / P₀ 3. Add g to both sides: k = D₁ / P₀ + g

P0=D1/(k-g) P0 = $35 k = 20% g = 8% $35 = D1/(20% - 8%) D1 = $4.20 D1 = D0 x (1+g) = $4.20 = D0 x (1+8%) D0 = $3.89

2. There are two ways to earn money from share investments: dividend yield and capital gains yield. Use these terms to describe the result of your algebra in part a. What is the total return in the equation? What is the dividend yield? What is the capital gains yield?