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ABC Company has recently paid a dividend of k 1 0 0 . The company quoted a price ofk 1 2 0 0 . The

ABC Company has recently paid a dividend of k 100. The company quoted a price ofk1200. The dividend is expected to grow at a rate of 5% for the next two years; at a rate of 10% for the subsequent three years and thereafter at a rate of 8% for unforeseeable future. Two investors are trying to reach a decision whether to consider the purchase of the stock or not. The required rates of return for the two investors are 20% and 25% respectively.

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