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The XWZ Company is listed in the stock market and it's expected to pay a dividend of $2.00 per share at the end of the

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The XWZ Company is listed in the stock market and it's expected to pay a dividend of $2.00 per share at the end of the year (D1=$2.00). The XWZ Company share has a beta of 0.9 with the market. The risk free rate is 4% p.a. and the market risk premium is 6%. The XWZ Company shares are currently selling $30.00 each. The XWZ Company's dividend it is expected to grow at a constant rate g. a) Calculate the required rate of return on the XWZ share using the CAPM. [10 marks] b) Use the constant growth model to calculate the dividend grow rate g. [10 marks] c) Calculate the XWZ Company stock price in year 2 and 3. [10 marks]

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