Assume that you plan to buy a share of ABC stock today and t…
Assume that you plan to buy a share of ABC stock today and to hold it for 3 years. Your expectations are that you will not receive a dividend at the end of Year 1, but you will receive a dividend of $9.25 at the end of Year 2 and $10 at end of Year 3. In addition, you expect to sell the stock for $150 at the end of Year 3. If your expected rate of return is 10 percent, how much should you be willing to pay for this stock today?
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