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ABC is expected to pay annual dividends of $1.65 and $2.81 per share the next two years, respectively. After that, the firm expects to maintain
ABC is expected to pay annual dividends of $1.65 and $2.81 per share the next two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 5 percent per year. What is the value of this stock today if the required return is 13 percent? (Hint: Treat the first dividend of $1.65 separately and then use Gordon growth model for the period when dividends are growing 5% a year but remember that period does not start until year 2..
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