ABC Company has been growing at a 10% rate, and it just paid a dividend of $3.00. Due to a new product, ABC expects to achieve a dramatic increase in its short-run growth rate, to 20% annually for the next 2 years. After this time, growth is expected to return to the long-run constant rate of 10%. The company's beta is 2.0, the required return on the market is 11%, and the T-bill rate is 7%.

What should be the stock price today?

Answer rating: 100% (QA)

To calculate the stock price today we need to use the dividend discount model DDM which takes into a... View the full answer