Suppose a firm pays a dividend on its stock at the end of


Suppose a firm pays a dividend on it's stock at the end of every period, the stock beta is 1.2, the firm just paid a dividend in the amount of $3.9, and dividends are expected to grow two percent every period forever. If the expected return on the market is 10.9-percent and the risk free rate is 3.3-percent, what is the most you should pay for the stock based on the CAPM and constant growth stock valuation model.

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Financial Management: Suppose a firm pays a dividend on its stock at the end of
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