5. Hulu Huup Inc. has introduced a new line of huups to be used only by consenting adults. In evaluating the company, you believe earnings and dividends will grow at rate of 25% for next two years, after which the growth rate will fall to 6%. The beta of HULU is 0.8, the risk free is 6%, and the market risk premium is 5%. HULUs most recent annual dividend was $2.00 per share and most recent annual earnings was $3.00 per share.

1) Calculate the equilibrium required rate of return according to CAPM

2) Estimate the fair value of the stock

3) Calculate the present value of growth opportunity

4) If the stock is selling at $75, is the market in equilibrium? If not ,how to achieve?