Essay
China America Manufacturing has a beta of 1.50, the risk-free rate of interest is currently 12 percent, and the required return on the market portfolio is 18 percent. The company plans to pay a dividend of $2.45 per share in the coming year and anticipates that its future dividends will increase at an annual rate consistent with that experienced over the 2001-2003 period. 
Estimate the value of China America Manufacturing's stock.
Correct Answer:
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ks = 0.12 + 1.50(0.18 - 0.12)
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