Question: StockX does not pay any dividends today and will not be paying any for the next 10 years. The dividend in year 11 will be

StockX does not pay any dividends today and will not be paying any for the next 10 years. The dividend in year 11 will be equal to $50 and all subsequent dividends will grow by 4% until year 15 and the dividend in year 16 will grow from D16 at the rate of 6%. All subsequent dividends will grow by 6% forever.

Required rate of return

Assume the risk free rate is 3.5% per year forever and the market risk premium is 5.0% that will also stay the same forever. The measure of non-diversifiable risk StockX is associated with today will stay constant forever.

Is StockX priced fairly? Is it overpriced or underpriced?

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