Problem 11-03 An investor with a required return of 16 percent for very risky investments in common stock has analyzed three firms and must decide which, if any, to purchase. The information is as follows: Firm A B Current earnings $ 1.80 $ 3.20 $7.00 Current dividend $ 1.10 $ 3.10 $8.00 Expected annual growth rate in 8 % 4 % -2 % dividends and earnings Current market price $ 17 $ 30 $ 49 a. What is the maximum price that the investor should pay for each stock based on the dividend-growth model? Round your answers to the nearest cent. Stock A: $ $ X Stock B: $ X Stock C: $ b. If the investor does buy stock A, what is the implied percentage return? Round your answer to two decimal places. X % c. If the appropriate P/E ratio is 12, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent. Stock A: $ Stock B: $ X Stock C: $ If the appropriate P/E ratio is 4, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent. Stock A: $ X Stock B: $ Stock C: $ X