Problem
Jane's sister-in-law, a stockbroker at Invest, Inc., is trying to get Jane to buy the stock of Health West, a regional HMO. The stock has a current market price of $25, its last dividend (D0) was $2.00, and the company's earnings and dividends are expected to increase at a constant growth rate of 10 percent. The required return on this stock is 20 percent. From a strict valuation standpoint, should Jane buy the stock?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.