The growth in dividends of ABC, Inc. is expected to be 15% per year for the next three years, followed by a growth rate of 8% per year for two years. After this five-year period, the growth in dividends is expected to be 3% per year, indefinitely. The required rate of return on ABC, Inc. is 13%. Last year's dividends per share were $1.85. What should the stock sell for today?
A) $8.99
B) $25.21
C) $40.00
D) $27.74
E) None of the options are correct.
Correct Answer:
Verified
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