StockX does not pay any dividends today and will not be paying any for the next 10 years. The dividend in year 11 will be equal to $50 and all subsequent dividends will grow by 4% until year 15 and the dividend in year 16 will grow from D16 at the rate of 6%. All subsequent dividends will grow by 6% forever.

Required rate of return

Assume the risk free rate is 3.5% per year forever and the market risk premium is 5.0% that will also stay the same forever. The measure of non-diversifiable risk StockX is associated with today will stay constant forever.

Is StockX priced fairly? Is it overpriced or underpriced?