ABC Inc. has distributed a $1.31 annual dividend to its stockholders. For the following seven years, the corporation plans to keep dividend growthat a steady 24%. The growth rate will then stabilize at 8% for all time after that. Mr. John, a novice Investor who needs a 12% rate of return, wantsto figure out the stock's value. Help him out with the math.$86.19$87.41$81.19O$14.07Reset Answer

Current Dividend = d0 = $1.31Growth Rate for next 7 Years = g7 = 24%Growth Rate after year 7 = g =…

Answered: ABC Inc. has distributed a $1.31 annual…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Please show all work and formulas in Excel - Company Miami just paid annual dividend of $25 today. The dividend is expected to grow at 8% for the next 3 years, then it will grow at 3% in perpetuity. If stocks of similar company earn 12% annual return, what is the price of a share of Company Miami stock?
The Brady Corporation just paid a dividend of $1.50. Its stock currently sells for $26.50. If investors require a 12% return on Brady's stock, and its rate of growth is constant 6%, what is the estimated value of Brady's stock two years from now?
Robin Williams is interested in buying stock, in a company that is increasing its dividends at a constant rate of 6.2%. Last year they paid a dividend of $2.65. The required rate of return is 18%. What is the current value of this stock? (round 2 decimal palces)$_____________
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A firm that just paid a dividend of $2.60. It plans to increase dividends by 5% in year one, 10% in year two, 20% in year three, 20% in year four, and then 3% per year thereafter. You feel that a 16% required return is appropriate. What is this stock worth to you? Question 35Answer a. $4.23 b. $34.23 c. $28.18 d. $38.55
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