Multiple growth rates Consider Firm ABC. They just paid a dividend of $.23 per share. They plan to increase this by 12 % during each of the next 3 years. In addition, during the third time period, plans are in place to merge with another company. This merger will result in a one-time influx of cash to Firm ABC.

They plan to disburse part of this cash as a one-time special dividend of $4.00 per share, which will be issued in addition to the normal dividend at time three.

Following that, the firm plans to continue to increase their dividends by 4 % per year forever after. As a further complication, the merger will increase the risk of the firm, which will be reflected in a higher required rate of return. Thus, for the next 2 years (starting at time 0), the firm will have a required return of 5.5 %. However, for time periods three and beyond, the firm will have a required return of 6.7 %. Given all this, what should be the current price of a share of ABC stock?