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Oi and ii only Question 4 (1 point) Listen Last month, you purchased a share of firm ABC. At that time, the expected dividend on

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Oi and ii only Question 4 (1 point) Listen Last month, you purchased a share of firm ABC. At that time, the expected dividend on the stock was $3.50, and the dividends were expected to grow at a constant growth rate of 5% per year forever. The firm was in talks about an upcoming project with the federal government. Given that the talks could have gone either way, there was some uncertainty around the firm's cash flows, and the market used a discount rate of 18%. Today, it has been declared that the firm is no longer in the race for the federal contract. This has decreased the firm's riskiness, and the current discount rate is 14%. However, the firm's future cash flows, and hence, the dividends, are also impacted. The company has announced that it will decrease its dividend payments to the shareholders. The future dividends will now be $2.80 and are expected to grow at a lower growth rate of 2.50% per year forever. If you sell the stock of ABC today. what is the percent return on your investment? Assume that no dividends are paid in the last month. -13.333% O-5.455%

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