Question: Q 7 . A . ( 7 points ) ( a ) ABC just paid a $ 0 . 4 0 annual dividend expected to

Q7.A.(7 points)(a) ABC just paid a $0.40 annual dividend expected to grow at 5% forever and its investors require 7.1% return. Estimate the price of ABC's stock using the Gordon Growth Model.
(b) Suppose investors suddenly realize that ABC's growth rate is actually only 4%. What will happen to its share price?
Q 7 . A . ( 7 points ) ( a ) ABC just paid a $ 0

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