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A stock that currently trades for $ 4 0 a share is expected to pay a year - end dividend of $ 2 per share.

A stock that currently trades for $40 a share is expected to pay a year-end dividend of $2 per share. The dividend is expected to grow at a constant rate over time. The stock has a beta of 1.2, the risk-free rate is 5 percent, and the market risk premium is 5 percent. What is the expected price of the stock?

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