Estimate that the risk-free rate is 5

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Question: ABC Talk is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 30 percent a year for the next five years and then set the growth rate to 10 percent per year indefinitely. The company just paid its annual dividend in the amount of $ 1 per share. What is the current value of one share of this stock if you estimate that the risk-free rate is 5%, beta is 2 and the market risk premium is 10%?

Show your work and any calculations necessary.

Reference no: EM133325752

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