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An investor with a required return of 1 4 percent for very risky investments in common stock has analyzed three firms and must decide which,
An investor with a required return of percent for very risky investments in common stock has analyzed three firms and must decide which, if any, to purchase. The information is as follows:
tableFirmABCCurrent earnings,$$$Current dividend,$$$Expected annual growth rate individends and earnings,,,,Current market price,$$$
a What is the maximum price that the investor should pay for each stock based on the dividendgrowth model? Round your answers to the nearest cent.
Stock :$
Stock :$
Stock C: $
b If the investor does buy stock what is the implied percentage return? Round your answer to two decimal places.
c If the appropriate PE ratio is what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent.
Stock :$
Stock B: $
Stock C: $
If the appropriate PE ratio is what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent.
Stock A: $
Stock B: $
Stock :$
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