Read the case given below and answer the questions given at the end.

CASE STUDY-II

Ram Enterprise has a beta of 1.5 and risk free return is 7 per cent and the expected return on the market portfolio is 14 per cent. The company presently pays a dividend of Rs 2.50 per share and investors expect a growth in dividend of 12 per cent per annum for many years to come.

Answer the following:

Q1. What is the required rate of return on the equity according to CAPM?
Q2. What is the present market price of the equity share, assuming the computed return as required return?