An investor with a required return of 14 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: Firm A B C Current earnings $ 1.60 $ 3.10 $ 7.50 Current dividend $ 0.80 $ 2.70 $ 7.40 Expected annual growth rate in 5 % 3 % -3 % dividends and earnings Current market price $ 17 $ 30 $ 50

What is the maximum price that the investor should pay for each stock based on the dividend-growth model? Round your answers to the nearest cent.

Stock A: $

Stock B: $

Stock C: $

If the investor does buy stock A, what is the implied percentage return? Round your answer to two decimal places. %

If the appropriate P/E ratio is 13, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent. Stock A: $ Stock B: $ Stock C: $

If the appropriate P/E ratio is 6, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent. Stock A: $ Stock B: $ Stock C: $