A common stock has earnings per share (E/S) of $1.50, a payout ratio of 0.60, a PE ratio of 10, and an annual rate of growth of earnings and a dividend of 6%. If you want to earn a 10% return, should you buy this stock? What is the maximum price you should be willing to pay for this stock? Use the valuation model.

A. The market price is less than the valuation ($23.85) and should be purchased.

B. The market price is less than the valuation ($23.85) and should not be purchased.

C. The market price is more than the valuation ($23.85) and should not be purchased.

D. The market price is more than the valuation ($23.85) and should be purchased.

E. None of the above