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Stock pays a dividend of $1.75 that growing annually at 3%. Stocks beta is 1.2, the Treasury bill yields 2.7% and the expected return on
Stock pays a dividend of $1.75 that growing annually at 3%. Stocks beta is 1.2, the Treasury bill yields 2.7% and the expected return on the market is 9.5%. Using the dividend-growth model, what is the maximum price you would be willing to pay for the stock? If the stock is trading at $20 would you buy it?
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