1) An investor estimates the dividend to be paid by company ABC to go over 3 growth phases. Initially, during 6 years, i

[answerhappygod]

1) An investor estimates the dividend to be
paid by company ABC to go over 3 growth phases. Initially, during 6
years, it will grow at a constant rate of 10% a year. During a
second phase, during 8 years, it will linearly decline until
reaching the steady state long-run value of 2%. In the third phase,
the growth will be at that steady state rate forever. Considering
this, answer the following questions (Note: consider the discount
rate to be 12% and that the last dividend paid by this company was
€25 per share):
a) On the basis of the approximation provided by the H model,
what is the theoretical price of a share of company ABC?
b) What is the value of the premium referring to the phase of
abnormal growth of dividends?