Semester 2 2016 Question 2: Ordinary Share Valuation 25 Marks a) The Secret Life of Pets Limited is currently paying an annual dividend of $0.45 per share. This dividend is expected to grow at the rate of 11% a year for the next three years, followed by a growth rate of 8% a year for the following two years. After that time, the dividend is expected to grow at 5% a year. The covariance between the company's share return and the market return is 0.24. The annual risk-free rate is 6.0% and the market risk premium is 4.0%. The variance of the market return is 0.19. i) What is the estimated price of this share? Show your calculations. 6 marks]