Question
ABC Inc. just paid (D0) $3.00 dividend per share. The dividend growth rate is expected to be constant (per year) at 15% for the next
ABC Inc. just paid (D0) $3.00 dividend per share. The dividend growth rate is expected to be constant (per year) at 15% for the next four years, after which dividends are expected to grow at a rate jof 5% forever. ABC's required return (rs) is 10%. Answer the questions showing the steps that you follow, (calculations)
a. what is the expected dividend at the end of first year (at t =1)?
b. what is the expected dividend at the end of the second year (at t =2)?
c. what is the expected dividend at the end of the third year (at t =3)?
d. what is the expected dividend at the end of the fourth year (at t = 4)?
e. what is the expected dividend at the end of the fifth year (at t = 5)?
e. What is the current price of ABCs stock ?
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