# Question: SAR Company’s Ordinary Shares Are Expected To Pay $1.4per Share In Dividends In4years And After Which The Dividends Are Expected To Grow At2% Annually Forever. Company ABC’s Shares Have A Beta Of1.4. The Long-term Return Of ASX200 Is9.6%and The Return Of T-bonds Is4.3%. A.What Is The Expected Return Of SAR’s Shares According …

Question: SAR Company’s Ordinary Shares Are Expected To Pay $1.4per Share In Dividends In4years And After Which The Dividends Are Expected To Grow At2% Annually Forever. Company ABC’s Shares Have A Beta Of1.4. The Long-term Return Of ASX200 Is9.6%and The Return Of T-bonds Is4.3%. A.What Is The Expected Return Of SAR’s Shares According …

SAR company’s ordinary shares are expected to pay $1.4pershare in dividends in4years and after which the dividends areexpected to grow at2% annually forever. Company ABC’s shares havea beta of1.4. The long-term return of ASX200 is9.6%and the returnof T-bonds is4.3%.

a.What is the expected return of SAR’s shares according to theCAPM?

b.What is the implied price per share?

.

a. The expected return of SAR’s share is

(round

to 2

dp)

b. The implied price per share is

$ (round

to 2 dp)