3. Assume a stock that will pay dividends of $1.55 each year for the next five years and will have an expected price of $25 in five years. It has a beta of 0.86. Market return is 12% and risk-free rate is 3%.

(1) Find its required rate of return.

(2) Find its value.

(3) If stock price is $18, what is the expected return? Is the price low or high? Is the expected return low or high? Is this stock a good investment? Explain.

(4) If stock price is $22, what is the expected return? Is the price low or high? Is the expected return low or high? Is this stock a good investment? Explain.