Suppose you want to buy ABC and hold it for the next 4 years.What would the selling price be for ABC in 4 years,assuming that none of our assumptions change?

Name: Suppose you want to buy ABC and hold it for the next 4 years.What would the selling price be for ABC in 4 years,assuming that none of our assumptions change?
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Question

Quizplus · Accepted Answer

Dividend in year 2 = $1.50*1.10*1.10 = $1.82
Dividend in year 4 = $1.50*1.10*1.10*1.05*1.05 =$2.00
Selling price at year 4 = $2.00 * 1.05 / (.125 - .05)= $28.01

Suppose You Want to Buy ABC and Hold It for the Next