Use the following information for questions 1-5. For the purpose of this question, the current date is Dec 31st, 2014. Toxic Diet, Inc is a diet marketing company which sells books, supplements, and diet foods. It has after-tax earnings in 2014 of $200M or $4.00 earnings per share (50m shares outstanding), and a tax rate of 30%. It also has $500M in debt on which it pays $25M in interest annually. Dividends of $1.30 per share were paid on December 30, 2014. Its stock price was $60 per share on December 31, 2014. Toxic Diet equity beta is 1.2. The risk free rate is 3% and the risk premium on the market is 6%. Show all work.

1. What return do investors expect on Toxic Diet’s stock (i.e. CAPM)? Round to the nearest tenth of a percentage point (i.e. enter 12.3% as 0.123)

2. What is Toxic Diet market capitalization on December 31, 2014? Round to the nearest whole dollar.

3. What is the current P/E ratio of Toxic Diet on Dec 31st, 2014? Round to one decimal place

4. What is the current dividend yield (based on the most recent dividend) of Toxic Diet on Dec 31st 2014? Round to the nearest tenth of a percentage point (i.e. enter 12.3% as 0.123)

5. What is Toxic Diet weighted average cost of capital (WACC)? Round to the nearest tenth of a percentage point (i.e. enter 12.3% as 0.123)