What is the return shareholders are expecting

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1. The Saguenay Tourism Company has a beta of 1.2, the risk-free rate is 2 percent, and the return on the market is 5 percent. The required return on the firm’s equity is:

2. Ecolap Inc. (ECL) recently paid a $0.56 dividend. The dividend is expected to grow at an 11.50 percent rate. The current stock price is $55.72. What is the return shareholders are expecting? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

3. Using everything you know about capital budgeting, if the two projects are mutually exclusive, which project or projects should the firm undertake? Explain in full. The answer must be complete (mini paragraph). Substantiate with numbers.

Reference no: EM132005711

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