RIO's companys ordinary shares are expected to pay $

2.6

per share in dividends for

3

years and after which the dividends are expected to grow at

2%

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

1.8.

The long-term return of ASX200 is

8.3%

and the market risk premium is

4%.

a.What is the expected return of RIOs shares according to the CAPM?

b.What is the implied price per share?

a. The expected return of RIOs shares is

nothing%

(round

to 2

d.p)

b. The implied price per share is $

nothing

(round

to 2

d.p.)