What is the maximum price that you should pay for this stock

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Reference no: EM131990080

Management has recently announced that expected dividends for the next three years will be as follows:

Year Dividend

1 2.50

2 3.25

3 4.00

For the subsequent years, management expects the dividend to grow at 5% annually. IF the risk-free is 4.3 % percent, the return on the market is 10.3 %, and the firm’s beta is 1.4, what is the maximum price that you should pay for this stock?

please explain in steps

Reference no: EM131990080

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