Determine the price of the stock using dividend

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Compute the Price of the stock using dividend discount Model.

ABC Company has been growing at a 10 percent rate, and it just paid a dividend of $3.00. Due to a new product, ABC expects to achieve a dramatic increase in its short-run growth rate, to 20 percent annually for the next 2 years. After this time, growth is expected to return to the long-run constant rate of 10 percent. The company's cost of capital is 15%. What should the price of the company's stock be today?

Reference no: EM1316075

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