Evaluate the current market value of a firm’s equity given that its cost of equity is 20%. The firm has just declared a dividend of $0.20 per share which is expected to grow at 12% per year into the...

Evaluate the current market value of a firm’s equity given that its cost of equity is 20%. The firm has just declared a dividend of $0.20 per share which is expected to grow at 12% per year into the future.

Discuss the history and assumptions underlying arbitrage pricing, the three factor and index models and their link with the CAPM.