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Z company is enjoying rapid growth. The company has just given a dividend per share...

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Finance

Z company is enjoying rapid growth. The company has just given a dividend per share of $1.15 The dividends are expected to grow by 7% per year for the first three years, 6% per year for two years and 10% thereafter. The risk free rate is 8% and the market risk premium is 5%. The standard deviation of the returns of the market which is half as high as that of the company's equity is 6%. And the correlation coefficient between the total returns on the company's equity and the total returns on the shares of the individual company is 45%. Find the present value of the equity share.

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