If ABC earned $8 per share with a retention or plowback ratio of 90%. Its initial...

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If ABC earned $8 per share with a retention or plowback ratio of 90%. Its initial growth rate is 30% and is expected to decline on a linear fashion until 10 years later when its growth will become constant at 5% from then on. The required return of the stock is 12%. What is the approximate value for ABC stock based on the H Model? If ABC earned $8 per share with a retention or plowback ratio of 90%. Its initial growth rate is 30% and is expected to decline on a linear fashion until 10 years later when its growth will become constant at 5% from then on. The required return of the stock is 12%. What is the approximate value for ABC stock based on the H Model?

Answer rating: 100% (QA)

To calculate the approximate value of ABC stock based on the H Model we need to consider the dividend growth rate and the required return The H Model ... View the full answer