RIO's companys ordinary shares are expected to pay $

2

per share in dividends for

6

years and after which the dividends are expected to grow at

2.2%

annually forever. Company ABC's shares have a beta of

1.7.

The long-term return of ASX200 is

9.5%

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?