Investor A and investor B both have required rates of return of 12%. They are considering the purchase of XTRA stock, which each views as a constant growth case. Both have estimated the dividend for...

Investor A and investor B both have required rates of return of 12%.  They are considering the purchase of XTRA stock, which each views as a constant growth case.  Both have estimated the dividend for the next period at $1.00, and both agree that the         expected growth rate in dividends will be 6% a year.  However, investor A plans to buy the stock and hold it for 10 years, while investor B plans to buy the stock and hold it for ONLY 1 year.  Which of the following statements is
CORRECT
about
stock valuation?

1. Investor A should be willing to pay more for this stock than B.


2. Investor B should be willing to pay more for this stock than A.


3. Both investors should be willing to pay the same price for the stock.


4. None of these.