ABC Common Stock Is Expected to Have Extraordinary Growth in Earnings

question 97

Multiple Choice

ABC common stock is expected to have extraordinary growth in earnings and dividends of 20% per year for 2 years,after which the growth rate will settle into a constant 6%.If the discount rate is 15% and the most recent dividend was $2.50,what should be the approximate current share price?

• A) $31.16
• B) $33.23
• C) $37.39
• D) $47.77

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