Question: A conglomerate has decided to spin off a segment as a self-standing public company. In their estimation the newly spun off company will be paying

A conglomerate has decided to spin off a segment as a self-standing public company. In their estimation the newly spun off company will be paying $ 9 dividend next year that will grow by 6% annually until infinity. Investors determine their required return based on the CAPM. The beta of the segment is estimated to be 2.2, the market's expected return is projected to be 10% and the risk free rate is 3%.

What is the price of a share in the newly spun off company using the constant growth model?

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