What is estimated current share price using dividend growth

Reference no: EM133615911

Problem: ABC Corp. is experiencing rapid growth. The current stock price is $45. The company expects the dividends to grow at 10% per year for the next 4 years before leveling off at 3% into perpetuity. The required return on the company's stock is 12%. If the dividend per share just paid is $2.5. What is the estimated current share price using the dividend growth model? Is the stock of ABC Co. is overpriced or underpriced?

Reference no: EM133615911

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