Solve

Example: Company CR7's current dividends is $2.40 per share and the firm expects the dividends to remain constant. If you knew that the beta for CR7 is 2, and the market risk premium is 2% and the treasury bill rate is 6%. Calculate the required rate of return. Calculate the maximum price an investor is willing to pay for the stock of CR7. As an investor, what action would you take if you knew that the current market price is $22