Q2: Corporation ABC just paid dividend of 1.25$ per share. ABC promises to increase its...
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Q2: 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% forver. The current market price is 30$ per share. The discount rate is 10% which of the following statements is correct.
A) ABC price applying is 27.71$. XYZ stock is overpriced
B) ABC price applying is 31.71$. XYZ stock is overpriced
C) ABC price applying is 32.71$. XYZ stock is underpriced
D) ABC price applying is 27.71$. XYZ stock is underpriced
E) ABC price applying is 30.00$. XYZ stock is fairly priced
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