1.Please calculate CAPM of Asset J with the following

1.Please calculate CAPM of Asset J with the following information:
where,
kj = required return on asset j,
Rf = risk-free rate of return, (6%)
bj = beta coefficient for asset j, (1.75)
Rm = market return. (10%)
The equation for CAPM is kj = Rf + [bj x (Rm – Rf)]

kj = Solve for required return on asset j (kj is CAPM)

2.Calculate the growth rate of Asset J dividends, we have to assume that future dividend payments will grow at a constant rate into the future forever. This constant rate can be estimated by calculating the average growth rate from the past dividends. Calculate Asset J’s dividend growth rate for the past 8 years.

Let:

Dj = $ .86,

D₈ = $2.00,

n = 8.

The equation for calculating the growth rate of dividends is the future value equation. FV=PV(1+i)ⁿ

where:

Dj = PV,

D8 = FV,

n = time

Growth Rate = I

Calculate the growth rate: Remember you have to change the Future Value Equation to find N or use your calculator.