A corporation just paid dividend of 1.25$ per share. It promises to increase its dividend...
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A corporation just paid dividend of 1.25$ per share. It promises to increase its dividend payment at 7% per year for the next 3 years, then the dividend will increase at 5% forever. The current market price is 30# per share. The discount rate is 10%. Which of the following statements is correct (closest answer)?
a) The corporation's price applying DDM is 30$ XYZ stocks is fairly priced
b) The corporation's price applying DDM is 32.71$ XYZ stocks is overpriced
c) The corporation's price applying DDM is 27.71$ XYZ stocks is underpriced
d) The corporation's price applying DDM is 30$ XYZ stocks is overpriced
e) The corporation's price applying DDM is 32.71$ XYZ stocks is underpriced
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