a) An investor purchased 5,000 shares of ABC Corporation 's common stock at $45 per share The stock pays an annual dividend of $1 75 per share During the next three years the dividend is expected to growth at an abnormal rate of 8 Thereafter, the dividend is expected to grow at 5 per year forever 1...

Stock price 45 share No of share purchased 5000 Annual dividend 1 ...

a) An investor purchased 5,000 shares of ABC Corporation's common stock at $45 per share. The stock

Question:

a) An investor purchased 5,000 shares of ABC Corporation's at $45 per share. The stock pays an annual of $1.75 per share. During the next three years the is expected to growth at an abnormal rate of 8%. Thereafter, the is expected to grow at 5% per year forever.
1. If the investor requires 12% to invest in the of companies with similar risk characteristics as ABC Corporation, what is the intrinsic value of this stock?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...