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1. (Each sub-question is worth 10 points.) Durkin, Elliehausen, and Zywicki co-manage a large global...

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1. (Each sub-question is worth 10 points.) Durkin, Elliehausen, and Zywicki co-manage a large global equity portfolio. They are researching Apple Corp. (AAPL), as of January 8, 2018. The current stock price is $175. The most recent quarterly dividend was $0.63 per share. Over the coming year, one more quarterly dividend of $0.63 is expected, followed by three quarterly dividends of $0.73. Using the CAPM, Durkin and Zywicki estimate that AAPL's required rate of return is 8 percent. They have set a one-year target price for AAPL of $210. Ignoring returns from reinvesting quarterly dividends: A. What is their one-year expected return? ( 10 points) B. What is the target price that is MOST consistent with AAPL being fairly valued as of January 8,2018? (10 points)

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