?Let's assume that? you're thinking about buying stock in West Coast Electronics. So far in your? analysis, you've uncovered the following? information: The stock pays annual dividends of $5.04 a share idefinitley. It trades a P/E of 9.5 times earnings and has a beta of 1.13. In? addition, you plan on using a? risk-free rate of 3.00?% in the? CAPM, along with a market return of 9?%.You would like to hold the stock for 3? years, at the end of which time you think EPS will be ?$7.93 a share. Given that the stock currently trades at ?$58.27?, use the IRR approach to find this? security's expected return. Now use the dividend valuation model? (with constant? dividends) to put a price on this stock. Does this look like a good investment to? you? Explain.

This? security's expected return? (IRR) is _____ %

The Value of the stock is $________

Does this look like a good investment to? you? Explain. ? (Select the best choice? below.)

A.

?No, the stock looks like it would not make a good investment. It has a justified price that is above its current market? price, and its expected return is higher than the required return.

B.

?Yes, the stock looks like it would make a good investment. It has a justified price that is below its current market? price, and its expected return is lower than the required return.

C.

?Yes, the stock looks like it would make a good investment. It has a justified price that is above its current market? price, and its expected return is higher than the required return.

D.

?No, the stock looks like it would not make a good investment. It has a justified price that is below its current market? price, and its expected return is lower than the required return.