ABC Corp. has an ROE of 8% and reinvests 40% of its net income. ABC has just paid an annual dividend of $0.3.

ABC stock has a beta of 0.6. The risk-free rate is 3.9% and the expected return on the market portfolio is 9%.

Part 1: What is the appropriate discount rate?

Part 2: What is the expected growth rate of dividends?

Part 3: What is the value of the stock?