Ex 2. Company B paid dividend in 2021 of 0,8 USD, in line with the expected dividend growth of 3% each year. Company C has announced it expects to pay a 1,3 dividend to common shareholders in 2022, and its cost of equity (CAPM) is of 7,5%. (Companys C paid dividend in 2021 of 1).

Both companies are from the automotive sector where the expected rate of return of the market is of 8%.

a. Which company has the most expensive share price ?

b. Would you rather buy stocks of Company B or C considering that Company B stock is trading at 15 and Company C stock at 75