An analyst is trying to value a high growth company , Zara INC. He has collected the relevant data found on the table below:

Growth [for the first 5 years]

32%

Growth [indefinite]

5%

TSX index Jan 1, 2015

12542

Risk free rate

2.5%

Beta

1.7

TSX index Dec 31, 2015

13950

Dividend payout

55%

Net income

$150,000

# of Shareholders

75000

Market Price

$150

a) Calculate cost of capital [r] using CAPM b) Find D1,D2,D3

c) Find D4

d) Calculate V3 using D 4

e) Discount D1,D2,D3 and V3

f) Calculate share price.

g) Is the share overvalued or undervalued ?