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What should be the expected abc stock price one year

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Reference no: EM132873203

Question 1: ABC company recently paid dividend of $5. However, due to challenging situation analysts forecast that company will not pay any dividend for next two years. They also forecast that from third year company will be paying an annual dividend of $3 which will grow at 4% rate, indefinitely. If investors' required rate of return on ABC company's stock is 12% then what should be the expected "ABC's stock" price one year from now in the stock market?

a. None of the available choices
b. $39
c. $33.48
d. $42
e. $29.89

Reference no: EM132873203

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