If the risk-free rate is 5%, the expected market risk premium (rm- rf ) is 10%, the
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If the risk-free rate is 5%, the expected market risk premium (rm- rf ) is 10%, the firm has no debt, the equity beta of the firm is 2, the first dividend paid at t=1 is 11, and annual dividends (paid every year forever, starting at t=1) are expected to grow at a rate of 10% per year, what share price should the firm's stock be trading at?
HINT: You can compute the share price as the discounted value of future dividends.
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