1. Assume that a share of common stock has just paid (yesterday) a dividend of $2.60 (D0), that the long-run sustainable growth rate is 6.0 percent, the risk-free rate is 4.0 percent, the risk premium on the market is 10.0 percent, and the stock’s beta is 1.20. Given this data, determine what the current price of this stock should be today.
| A. | $25.44 |
| B. | $26.50 |
| *C. | $27.56 |
| D. | $28.62 |
| E. | $29.68 |
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