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Hey just struggling with these revision question can you answer it for me? Part A Company ABC is expected to pay a dividend of $3.00

Hey just struggling with these revision question can you answer it for me?

Part A

Company ABC is expected to pay a dividend of $3.00 forever from Dec 31, 20x1.

The market required return is 15% p.a.

Required

If the share is trading at $60 on Jan 1, 20x1, what is the implied constant growth rate in dividends for the future?

Part B

Company ABC does not pay dividend.

Its stock is currently priced at $40, and is expected to increase in price to $45 by end of the year.

The market risk premium is 6%; the risk-free rate is 5%.

Required

Is the stock overpriced, underpriced, or appropriately priced accordingly to CAPM, if the stock has a beta of 0.6?

Please justify your answer with appropriate calculations.

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