Suppose you are considering buying a stock. You expect the stock to pay a dividend of $3 one year from today, $3.20 two years from today, and then dividend will grow 3% each year after that. Using the CAPM, you estimate your required return at 7% 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

$77.57

$74.21

$56.72

$33.93