Question
ABC increased their annual dividend to $1.52 (D0) last year. The cost of equity (Ke) is 7.00%, dividend growth is 2.00%/year. a) Applying the dividend
ABC increased their annual dividend to $1.52 (D0) last year. The cost of equity (Ke) is 7.00%, dividend growth is 2.00%/year.
a) Applying the dividend growth model, what is the fair value of ABCs stock?
b) If ABC's stock is selling at $28/share, keeping the same cost of equity, indicate if and why the market is applying a higher or lower dividend growth rate than that assumed.
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Brilliant Book Keeping How To Keep Your Business Efficient And Cost Effective
Authors: Martin Quinn
1st Edition
0273731785,0273746707
