The board of directors of API, a relatively new electronics manufacturer, has decided to continue

paying a common stock dividend to increase the attractiveness of the stock in the free market.

The board plans to pay $$2\mathrm{.}45$ per share in the coming year $($next year$)$ and anticipates that its

future dividends will increase at an annual rate consistent with that experienced over the period

from $20$X$0-20$X$3($see below$).$ The company currently has a beta of $1\mathrm{.}62,$ the rate of return for

the market is expected to be $8\%$ and the risk$-$free rate is currently $2\mathrm{.}9\%.$ Given this scenario,

what is the current value of API's common stock? If the current market price is $$48\mathrm{.}30$ per share,

should you purchase this stock? Briefly, explain your answer. $($HINT: This problem requires a

three$-$part calculation to solve it$).$

Year Dividend

$20$X$3$ $$2\mathrm{.}38$

$20$X$2$ $$2\mathrm{.}21$

$20$X$1$ $$2\mathrm{.}10$

$20$X$0$ $$2\mathrm{.}05$