3 Q16 A B F G H L M 2 ABC, Inc has the following information 3 4 Last dividend $ 0 40 5 5 year dividend growth rate 38 6 Perpetual growth rate 5 7 Required return 15 9 10 Assume that the perpetual growth rate begins 9 years from now and use linear interpolation between the high 11 o growth rate and perpetual growth rate Construct a table that shows the dividend growth rate and dividend each 12 year What is the stock price at Year 10 What is the stock price today 13 14 Year 1 2 3 15 Dividend growth 4 Dividend 5 6 9 10 16 17 18 19 20 Price at Year 10 Price today 21 Use a data table to show how the current stock price would change as the perpetual growth rate changes from 0 to 10 22 23 24 25 26 27 28 29 31 32 34 35 36

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3 Q16 A B F G H L M 2 ABC, Inc  has the following information  3 4 Last dividend $ 0 40 5 5 year dividend growth rate  38  6 Perpetual growth rate  5  7 Required return  15  9 10 Assume that the perpetual growth rate begins 9 years from now and use linear interpolation between the high 11 o  growth rate and perpetual growth rate  Construct a table that shows the dividend growth rate and dividend each 12 year  What is the stock price at Year 10  What is the stock price today  13 14 Year 1 2 3 15 Dividend growth  4 Dividend 5 6 9 10 16 17 18 19 20 Price at Year 10 Price today  21  Use a data table to show how the current stock price would change as the perpetual growth rate changes from 0  to 10  22 23 24 25 26 27 28 29 31 32 34 35 36

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Fundamental Accounting Principles

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Fundamental Accounting Principles

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