You are analyzing a stock which is currently being traded at Rs. 150.0 in anticipation of its dividend of Rs. 12.0 expected at the end of ongoing year. The stock is 50 percent more volatile than the broader equity market, which is offering an equity risk premium of roughly 6% per annum. The monetary policy of the country is also expansionary due to which treasury bills are offering a meagre returns of 5% per annum and are not being considered as an attractive investment opportunity for most of the investors. You are skeptical about the current price of the stock and wondering what growth projections have been used by the market on sustainable basis to value the stock? 5 points

4%

5%

6%

7%

8%