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Business, 03.08.2019 01:20 lefthandeddolan

"let's assume that you're thinking about buying stock in west coast electronics. so far in your analysis, you've uncovered the following information: the stock pays annual dividends of $4.82 a share indefinitely. it trades at a p/e of 9.6 times earnings and has a beta of 1.12. in addition, you plan on using a risk-free rate of 5.00% in the capm, along with a market return of 11%. you would like to hold the stock for 3 years, at the end of which time you think eps will be $7.48 a share. given that the stock currently trades at $49.04, use the irr approach to find this security's expected return. now use the dividend valuation model (with constant dividends) to put a price on this stock. does this look like a good investment to you? explain."

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