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Draw a timeline for the cash flows for stock

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Reference no: EM132149250

Consider the stock of ABC Inc., a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 12 percent growth rate, thereafter. The stock has a required rate of return of 17% and the most recent dividend (D0) of $2.49 per share.

a. Draw a timeline for the cash flows for this stock

b. What is the value (price) of the stock today (i.e. P0)?

Reference no: EM132149250

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