Q4 Suppose you are considering buying a stock. You expect the stock to pay a dividend of $2 one year from today, $2.25 two years from today, and then dividend will grow 2% each year after that. Using the CAPM, you estimate your required return at 10% to compensate you for the risk of this stocks cash flows. What is the maximum price you are willing to pay for a share of the stock? LO3

$27.39

$42.41

$32.67

$47.39