Goat Contractors Ltd. is a stable growth dividend paying company. The most recent quarterly dividend was $1.20 per share, and the dividends are expected to grow on average at a rate of 4% per year. If the investors are expecting a 12.5% annual return on the stock, what should be the price of the stock?

If the stock price is currently $65.75, would you buy the stock? Why?

(Hint: you need to annualize the quarterly dividend.)

Show your calculations!