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

The management of Pearls India Shopping Ltd has recently announced that expected dividends for the next three years will be as follows:

For the remaining years, the 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. 42.39
B . Rs. 41.38.
C . Rs. 47.45
D . Rs. 39.15

View Answer

Answer: B