1. If the risk-free rate is 5%, the firm's required rate of return on its debt is 6%, the equity beta is 1.4, the equity risk premium is 5.5%, the corporate tax rate is 34%, and the debt-equity ratio is 0.5, what is the expected rate of return on the assets of the firm that is predicted by the capital asset pricing model (CAPM)?

2. Suppose that a firm's corporate headquarters thinks that the appropriate dollar rate of return on invest- ments in Japan is 18% per annum. If the dollar is expected to weaken relative to the yen by 4% per annum, what is the Japanese yen required rate of return on the expected yen cash flows?