ABC Corporation does not currently pay a dividend but is expected to do so in four years. The first dividend received a
Posted: Mon Nov 15, 2021 5:14 pm
ABC Corporation does not currently pay a dividend but is expected to do so in four years. The first dividend received at t-4 is expected to be $ 5. The second dividend received at t = 5 is expected to be $ 5.5. The third dividend received at t = 6 is expected to be $ 6.05. If from the seventh-year dividends are expected to grow at a constant rate of 4% into perpetuity, what is the estimated current intrinsic value of ABC's common stock? Consider for your calculations a required return of 10%. Answer: