Please explain and show the formula you used for each cell

Question Starts Here: Fill the highlighted cells up and add additional inputs$/$outputs if necessary

Assume that Temp Force has a beta coefficient of $1\mathrm{.}2,$ that the risk$-$free rate $($the yield on T$-$bonds$)$ is $7\mathrm{.}0\%,$ and that the market risk

premium is $5\%.$ What is the required rate of return on the firm's stock? Apply CAPM.

CAPM estimated required rate of return on the stock $=r_{RF}+$ beta $*$Market Risk Premium

Ans:

Assume that Temp Force is a constant growth company whose last dividend $(D_0,$ which was paid yesterday$)$ was $$2\mathrm{.}00$ and whose

dividend is expected to grow indefinitely at a $6\%$ rate.

$(1.)$ What is the firm's current stock price?

$(2.)$ What is the stock's expected value $1$ year from now?

$(3.)$ What are the expected dividend yield, the capital gains yield, and the total return during the first year?

Constant Growth Model:

INPUTS:

$D_0=$

$g_L=$

$r_s=$

widehat$(P{)}_0=\frac{D_1}{(r_s-g_L)}=\frac{D_0(1+g)}{(r_s-g_L)}$

$D_1=D_0(1+g_L)$

$P_0=\frac{D_1}{(r_s-g_L)}=$

Stock Price $1$ year from now:

$P_1=\frac{D_2}{(r_5-g_L)}$

$D_2=D_1(1+g_L)=$

$P_1=$

$P_1=$