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IO's companys ordinary shares are expected to pay $ 2 per share in dividends for 3 years and after which the dividends are expected to
IO's companys ordinary shares are expected to pay $
2
per share in dividends for
3
years and after which the dividends are expected to grow at
1.7%
annually forever. Company ABC's shares have a beta of
1.1.
The long-term return of ASX200 is
8.2%
and the market risk premium is
5%.
a.What is the expected return of RIOs shares according to the CAPM?
b.What is the implied price per share?
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