1. Based on the dividend growth model, brietly give the reason why a lower current payout will not affect the stock price. (5 points)

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