What is the maximum you should pay for this stock

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Reference no: EM132042469

The following information has been provided on a popular Hitech stock:

Market risk premium is given as 9% and rate of return on Treasury bills is 3%. The stock has a beta of 1.2. Furthermore, the stock recently commenced dividend payment and paid a dividend of $3.40 per stock. You expect the dividend to grow rapidly for the first three years at 20%, 15% and 10% and, thereafter, smoothen at 8%. What is the maximum you should pay for this stock?

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Reference no: EM132042469

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