Dividend is expected to grow-what is value of stock today

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Reference no: EM131061135

What is the value of ABC Company stock TODAY in each of the following independent cases:

A. ABC is expected to pay a $2.25 dividend next year, and this dividend is expected to grow at a 3% annual rate forever. If the required return is 8%, what is the value of this stock today?

B. ABC is expected to pay no dividends during the next 3 years, and is expected to pay its first dividend of $2.25 four years from today.After that, the dividend is expected to grow at a 3% annual rate forever.If the required return is 8%, what is the value of the stock today?

Reference no: EM131061135

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