Question: The Abacus Computer Computer has decided to use the Capital Asset Pricing Model (CAPM) to estimate its risk-adjusted rate of return (k) in order to

 The Abacus Computer Computer has decided to use the Capital Asset

The Abacus Computer Computer has decided to use the Capital Asset Pricing Model (CAPM) to estimate its risk-adjusted rate of return (k) in order to determine the price of its common stock. The firm's beta is 1.5. The S&P 500 has returned 10% to investors over a long period of time, and Abacus has decided to use this value as its expected market return. Treasury bills are currently providing investors with a risk-free return of 1%. Abacus next expected dividend is $3.25, and its growth rate of dividends is estimated at 10%, what is its nsk-adjusted rate of return and its stock price? Select one: 14.5% and $72.22 14.75% and $40.45 14.85% and $45.95 17.5% and $43.33

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