1 Dividend discount model Consider the following three stocks: tock A is expected to provide a dividend of $10 a share forever. Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 4% a year forever Stock C is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for five years (ie-Years 2 through 6) and zero thereafter. If the market capitalization rate for each stock is 10%, which stock is the most valuable? What if the capitalization rate is 7%