6. Gurley Enterprises stock has a required return of 14.70%. The company, which plans to pay a dividend of $3.20 per share in the coming year, anticipates that its future dividends will increase at an annual rate consistent with that experienced over the 2012-2018 period, when the following dividends were paid:

Year Div. per Shr

2012 - $1.84

2013 - $1.95

2014 - $2.20

2015 - $2.33

2016 - $2.44

2017 - $2.60

2018 - $2.75

a. If the risk-free rate is 4%, what is the risk premium on Gurleys stock?

b. Using the constant-growth model, estimate the value of Gurleys stock.