Company ABC's earnings and dividends will grow at 0.5% monthly during the next five years. Its growth will stop after year 5. In year 6 and afterward, it will pay out all earnings as dividends. Assume next year's EPS is $10 and the dividend is $5 and the market capitalization rate is 9%.
What is ABC's stock price?© BrainMass Inc. brainmass.com June 3, 2020, 6:34 pm ad1c9bdddf
The solution explains the calculation of stock price using the 2-stage dividend discount model.