Required rate of return as per CAPM = Risk free rate + beta*Market risk premium
= 3.5% + 1.15*6%
= 10.4%
Stock Price is equal to the present value of all future cash flows
= 1.75(1.22)/(1.104) + 1.75(1.22)^2/(1.104)^2 + 1.75(1.22)^2(1.08)/(1.104)^2(10.4%-8%)
= $100.2393
i.e. $100.23
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