23. ABC Company just paid a dividend of $1.00 per share. If dividends are expected to grow at an annual rate of 2.50% from here on out, the risk-free rate is 3%, B this stock is one and one-half times as risky as the market on average, and the expected return on the market is 7%, according to CAPM, what is the required rate 4 of return on this stock and what would its PPS be today? 5 6 LATEST DIVIDEND PER SHARE 7 EXPECTED CONSTANT DIVIDEND GROWTH 8 RISK-FREE RATE 9 RISK VERSUS AVERAGE MARKET RISK 10 EXPECTED RETURN ON MARKET 11 MARKET RISK PREMIUM 12 REQUIRED RATE OF RETURN 13 PPS 14 $ 1.00 2.50% 3.00% 1.5 7.00% 9.00% $ 15.77