The ABC Co. has paid annual dividends of $0.30, $0.64, $1.20, and $1.45 over the past four
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Question:
The ABC Co. has paid annual dividends of $0.30, $0.64, $1.20, and $1.45 over the past four years. Dividends in the future are expected to grow at a constant rate of 3.5%. Which one of the following formulas should be used to compute the value of the stock today?
a.P0 = D1/(1 + r)1+ D2/(1 + r)2... + Dn/(1 + r)n+ Pn/(1 + r)n
b.P0 = D/r
c.P0 = D1/(1 + r)n+ g
d.P0 = D1/(r - g)
e.P0 = D1/(r - g)n
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
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