A company recently paid a dividend of $1.20. You expect dividends to grow at a rate of 6% for 1 year, then level off to 5% per year, forever. The companys shares have a correlation with the market of 0.6. The standard deviation of the market is 2.4% and the standard deviation of the stock is 3.5%. The return on T-bills is 5% and the market risk premium is 4%. What would you be willing to pay for this stock?

E(R)=R +eE(R )-R u b ifeMfui

= 5% + (4% ) .875 = 8.5%

Share Price:

I don't know how to do and can't understand share price. also what is answer?