Part 1:

Discuss the benefits and issues related to stock ownership as an investment type. What are the issues related to equity as a source of additional funds, and valuation concepts?

Part 2:

Stock ABC is expected to pay dividends of $1.20 and $1.50, respectively in one and two years. After that, ABC is entering a constant growth stage, after which ABC is expected to grow with the constant growth rate of 4%. If the required rate of return on ABC is 12% what is the price of ABC? Explain fully! Show your work!