A fictional company ABC plc which paid the following dividends per share in the past:
Dividend per share (£) 4 years ago 3 years ago 2 years ago 1 year ago This year 2.31 2.33 2.41 2.47 2.56
The company has a beta (\beta ) of 0.9, the market risk premium is (E(RM) - RF) = 6% and the risk-free rate of interest is RF = 4%.
i.Compute the fundamental value of ABC stock according to the Gordon growth model, assuming that the future dividend growth rate will be equal to the historical one.