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For five telecom stocks, the table below provides the expected dividend for next year, the...

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Accounting

For five telecom stocks, the table below provides the expected dividend for next year, the current market price, the expected dividend growth rate, and the beta. The risk-free rate is currently 5.2%, and the market risk premium is 6.1%.

Stock

Dividend

Price

Dividend Growth Rate

Beta

Stock 1

2.2

50.32

3

1.2

Stock 2

3.1

35.8

5

0.85

Stock 3

1.85

46.2

3.5

1.2

Stock 4

0.95

33.69

4.5

0.95

Stock 5

3.1

61.2

6

0.74

i) Calculate the expected rate of return for each stock using the Gordon growth model.

ii) Calculate the required rate of return for each stock using the CAPM.

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