44. Assume that the current market price of Zigi, Inc. stock is $54.59. If Zigi, Inc. just paid a dividend of $4.57 per share (i.e., D0 = 4.57), and if investors expect that the company’s dividends will grow at an annual rate of 2.47% forever, then Zigi, Inc.’s required rate of return is ____%. (Record your answer rounded to 1 decimal place; for example, record 18.29654% as 18.3). 45. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, D0 = 3.25). Investors expect the dividend to grow at 45% in years 1 and 2, they expect the dividend to grow at 25% in year 3 and they expect that all future dividends (that is, dividends in years 4, 5, ..., infinity) to grow at a constant rate of 5% per year. If the cost of capital for Phillips, Inc. stock is 18%, what is the current price of the stock?

44. Assume that the current market price of Zigi, Inc. stock is $54.59. If Zigi, Inc. just paid a dividend of $4.57 per share (i.e., D0 = 4.57), and if investors expect that the company’s dividends will grow at an annual rate of 2.47% forever, then Zigi, Inc.’s required rate of return is ____%. (Record your answer rounded to 1 decimal place; for example, record 18.29654% as 18.3). 45. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, D0 = 3.25). Investors expect the dividend to grow at 45% in years 1 and 2, they expect the dividend to grow at 25% in year 3 and they expect that all future dividends (that is, dividends in years 4, 5, ..., infinity) to grow at a constant rate of 5% per year. If the cost of capital for Phillips, Inc. stock is 18%, what is the current price of the stock?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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