Stock a is expected to provide a dividend of 10 per share


Stock A is expected to provide a dividend of $10 per share forever. Stock B is expected to pay a dividend of $5 next year, after which dividends are expected to grow forever at 5.4%. finally, stock C is expected to pay a dividend of $2 in two years after which dividend growth is expected to be 18% per year for 8 more years and no further growth in dividends therafter. If the required rate (r) for each stock is 12%, which stock is the most valuable?

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Financial Management: Stock a is expected to provide a dividend of 10 per share
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