ABC Inc. just announced it is increasing its annual dividend to $2.00 next year and establishing a
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Question:
ABC Inc. just announced it is increasing its annual dividend to $2.00 next year and establishing a policy whereby the dividend will increase by 3 percent annually thereafter.
(1) What will the dividend be 5 years from now?
(2) How much will one share of this stock be worth 10 years from now if the required rate of return is 10 percent?
Please show all work.
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