Question 4 (3 marks)

A company currently pays a dividend of $2 per share that is D₀ =$2. It is estimated that the companys dividend will grow at a rate of 20 percent for the next 2 years and thereafter the dividend will grow at a constant rate of 7 percent forever. The companys shares has a beta equal to 1.2, the risk free rate is 7.5 percent and the market risk premium is 4 percent. What is the shares current intrinsic value?