06-23-2010, 07:26 PM
ABC Co. just paid a dividend of Rs.7.50 per share. The company will increase its dividend by 15% next year, and then will reduce this dividend growth rate by 5% annually until it reaches the industry average of 5 percent, after which the company will keep a constant growth rate forever. If the required return on ABC stock is 14.50 percent, what will be a share of stock sell for today?