What is the maximum price that you should pay for this stock?

Management has recently announced that expected dividends for the next three years will be as follows:

For the subsequent years, management expects the dividend to grow at 5% annually. If the risk-free rate is 4.30%, the return on the market is 10.30% and the firm’s beta is 1.40.

What is the maximum price that you should pay for this stock?
A . Rs. 167.25
B . Rs. 41.38
C . Rs. 165.45
D . Rs. 168.86

View Answer

Answer: B