ABC Corp. has just paid a dividend of $3 per share. Youan experienced analystfeel quite sure that

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ABC Corp. has just paid a dividend of $3 per share. You—an experienced analyst—feel quite sure that the growth rate of the company’s dividends over the next 10 years will be 15% per year. After 10 years you think that the company’s dividend growth rate will slow to the industry average, which is about 5% per year. If the cost of equity for ABC is 12%, what is the value today of one share of the company?

Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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