Question: 6. Using the table below, what is the maximum that an investor shouldbe willing to pay for the share of common stock today? Table below

6.

Using the table below, what is the maximum that an investor shouldbe willing to pay for the share of common stock today?

Table below to be used with problem #6:

Variable

Value

Explanation

Dividendgrowth estimate

3%, 7%

3% for next 2 years (annual estimate) and 7% per year indefinitely thereafter.

Current dividend

$1.00

Paid to shareholders on record as of 6/28/22

Beta coefficient

2.0

Current estimate

Expected market risk premium

12.0%

Expected (annual) return on the S&P 500 Index

RFR

3.0%

Expected 30-year Treasury bond yield

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