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3. A local bank pays 100% of its earnings out in dividends. If earnings continue to grow at 2% per year and the most

3. A local bank pays 100% of its earnings out in dividends. If earnings continue to grow at 2% per year and the most recent annual dividend is $0.88. How much would you be willing to pay for this stock if you expect the return on the market portfolio to be 10%, the risk-free rate to be 3%, and the company's beta to be 0.7?

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