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Question 3 (10 marks) ABC Ltd. is expected to increase its dividends by 10% for the next 2 years. After that, the dividends will grow

Question 3 (10 marks) ABC Ltd. is expected to increase its dividends by 10% for the next 2 years. After that, the dividends will grow at a rate of 5% per year, indefinitely. The last dividend just paid was $1.20 and the investors required rate of return on this stock is 12%. (a) What are the dividends amount of Do, D1, D2, and Dz? Show your calculations. (2 marks) 4 (b) What is the price of the ABC stock one year from now? Show your calculations. (4 marks) (c) Briefly describe FOUR distinctive characteristics of preferred stock. (4 marks)

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