Tetron plc is a highly innovative, but risky, Electronics Company with a brand new product that has received excellent reviews in trade magazines….

1.    Tetron plc is a highly innovative, but risky, Electronics Company with a brand new product that has received excellent reviews in trade magazines. It has just paid a dividend of £0.9 pence per share, and its dividend is expected to grow at 20 per cent per annum for the next three years. By year 5 analysts expect that its dividend growth will have settled to the industry average of 2 per cent. 

Market data

Risk free rate is 2% p.a.

Market risk premium is 8% p.a. 

Tetron’s beta is 1.9. 

Tetron’s share price is £10

Would you recommend purchasing Tetron’s shares at their current price? Show any calculations.

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