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Annual dividends in the two years

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You are indecisive about which stock to buy: ABC, which is selling for $47 a share; or XYZ, which is selling for $35 a share. ABC stock promises to pay annual dividends of $2.00, $2.50, $3.00, and $3.50 over the next four years, respectively, and you estimate it can be sold for $60 at the end of the fourth year. XYZ will not pay any dividends the first two years, but will pay 50 cents in annual dividends in the two years after that and is expected to be selling for $45 in four years. Which stock would you buy if stocks from this industry typically yield 10% per year?

Reference no: EM131710371

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