What is the value of share of corporation stock today

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Reference no: EM131347598

You would like to purchase the stock of ABC Corporation. Based on your forecast, the company will not pay dividends at the end of year one, year two, and year three, as it is in the start-up stage. You expect that ABC Corporation will start paying dividends at the end of year four, in particular, the estimated dividends are:

End of year 4: $0.10 per share

End of year 5: $0.20 per share

End of year 6: $0.25 per share

The dividends are expected to grow at a constant rate of 6% per year thereafter. Given a required rate of return of 15% per year, what is the value of a share of ABC Corporation’s stock today? Show your calculation.

Reference no: EM131347598

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