Assume a major investment service has just given Big Lake Realty its highest investment rating, along with a strong buy recommendation. As a result, you decide to take a look for yourself and to place a value on the company's stock.Here's what you find: This year, Big Lake paid its stockholders an annual dividend of

$4.41

a share, but because of its high rate of growth in earnings, its dividends are expected to grow at the rate of

9%

a year for the next five years and then to level out at

5%

a year. So far, you've learned that the stock has a beta of

1.26,

the risk-free rate of return is

3.9%,

and the expected return on the market is

10.5%.

Using the CAPM to find the required rate of return, put a value on this stock.

Using the CAPM, the required rate of return on the investment is

nothing