What is the expected return of smu stock

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Assume capital markets are perfect. SMU Corp is currently an all equity company. Its assets will be worth $817 million in one year if the economy is strong, but only $286 million if the economy is weak. Both events are equally likely. The market value today of SMU's assets is $418 million. Suppose the risk-free interest rate is 6%. If SMU borrows $188 million today at this rate and uses the proceeds to pay an immediate cash dividend,

What is the expected return of SMU's stock just after the dividend is paid ?

Round to 4 decimals please.

Reference no: EM132826166

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