1. The common stock of Schrodinger Feline Supplies has a beta of 1.64 and a standard deviation of 23.2 percent. The market rate of return is 12.2 percent and the risk-free rate is 5.4 percent. What is the cost of equity (in percents) for Schrodinger Feline Supplies?
2. The common stock of Faraday Chemical, Inc. has 16.5 percent less systematic risk than the overall market. Currently, the market risk premium is 8.6 percent while the U.S. Treasury bill is yielding 5.7 percent. What is Faraday's cost of equity (in percents)?
3. Waterworks has a dividend yield of 6.25%. If its dividend is expected to grow at a constant rate of 3.25%, what must be the expected rate of return on the company’s stock?