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If the risk-free rate is 5%, the expected market return is 10%, the beta of the firm is 2, the current dividend is 1 and

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If the risk-free rate is 5%, the expected market return is 10%, the beta of the firm is 2, the current dividend is 1 and dividends are expected to grow at a rate of 10% per year, what price should the firm's stock be trading at? P= 1.1 7.10 = $11 P= 1.17.15 = $7.33 = P= 1/.1 = $10 P= 1.1/.05 = $22

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