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
Answer: B