ABC Inc. does not currently pay a dividend. Analysts expect ABC to commence paying annual dividends in three years. The first dividend is expected to be $2 per share. Dividends are expected to grow from that point at an annual rate of 4% in perpetuity. Investors expect a 12% return from the stock. 

What should the price of the stock be today?

Answer rating: 100% (QA)

To calculate the price of the stock today we can use the dividend discount model DDM The DDM calcula... View the full answer