You observe that the stock price of the ABC corporation is currently $123. The company has never paid any dividends. However, it has just announced that is going to change its tradition and will distribute the dividend of $2 in two years. After that, it is expected to increase its annual dividend at the rate of 2% per annum in perpetuity. Given this information, what is the implied discount rate?

Answer rating: 100% (QA)

To find the implied discount rate you can use the Gordon Growth Model also known as the GordonShapir... View the full answer