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SAR companys ordinary shares are expected to pay $ 1 per share in dividends in 3 years and after which the dividends are expected to
SAR companys ordinary shares are expected to pay $ 1 per share in dividends in 3 years and after which the dividends are expected to grow at 2% annually forever. Company ABC's shares have a beta of 1.4. The long-term return of ASX200 is 8.7% and the return of T-bonds is 4.4%.
a. What is the expected return of SARs shares according to the CAPM? b. What is the implied price per share?
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