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Corporation ABC just paid dividend of $1.25 per share. ABC promises to increase its dividend...

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Finance

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Corporation ABC just paid dividend of $1.25 per share. ABC 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? (Please select the closest answer) ABC's price applying DDM is $27.71. XYZ stock is underpriced. O b. ABC's price applying DDM is $27.71. XYZ stock is overpriced. O c. ABC's price applying DDM is $30.00. XYZ stock is fairly priced. O d. ABC's price applying DDM is $32.71. XYZ stock is underpriced. O e. ABC's price applying DDM is $32.71. XYZ stock is overpriced

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