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Please use the keyboard only, FIN101 Q1 . Ahmed is interested in purchasing the common stock of Inch, Inc., which is currently priced at $

Please use the keyboard only,

FIN101

Q1. Ahmed is interested in purchasing the common stock of Inch, Inc., which is currently priced at $ 40. The company is expected to pay a dividend of $3 next year and to grow at a constant rate of 8 percent. 1.5 marks

a. What should the market value of the stock be if the required rate of return is 15.75 percent?

b. Is this a good buy? Why or why not?

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