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ABC Inc
ABC Inc. is mature firm in the machine-tool-component industry. The firm's most recent common stock dividend was $2.40 per share. Due to its maturity as well as stable sales and earnings, the firm's management feels that dividends will rise at 5% annually for the next 3 years, after which the dividend will grow at -3% forever. The required rate of return on this stock is 12%.
- (5 points) What is the current price of ABC's common stock?
- (3 points) What is the expected stock price one year from today?
- (2 point) What is the expected stock price 12 years from today?
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