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To help the economy recover, the FED decided to keep the required rate of return for the next 3 years at 1%. Thereafter, the required
To help the economy recover, the FED decided to keep the required rate of return for the next 3 years at 1%. Thereafter, the required rate of return is likely to increase to 4%. Assume that the required rate of return will stay at 4% forever, calculate stock price for company ABC whose dividend payment is as follows. No dividend for the next three years. First dividend will be $1 at the end of the fourth year and the dividend will grow at a constant growth of 2% forever.
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