Question: ABX Ltd currently does not pay a dividend to its shareholders but equity analysts expect that the company will start paying a $1.20 dividend at

ABX Ltd currently does not pay a dividend to its shareholders but equity analysts expect that
the company will start paying a $1.20 dividend at the end of year 3. They expect this dividend
to grow at an annual rate of 4% over the foreseeable future. If the required return on ABXs
shares is 12% its share price today should be closest to:
a) $11.10.
b) $11.96.
c) $15.00.
d) $15.60.

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