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5. The past four dividends for the Zywicki Corporation are shown below. Calculate dividend D_1 by applying the historical (arithmetic) average growth rate of dividends. Compute the expected share price at the end of 2023 using the perpetual dividend growth method. Assume the market risk premium is 11.7 percent, Treasury bills yield 5.9 percent, and the beta of the firm is 0.88. (6 POINTS) Dividend, $ Year 2023 2022 2021 2020 1.80 1.65 1.50 1.40 A. What is the historic, arithmetic average growth rate? $1.23 X B. What is the discount rate, k? 11.7% X P = 1.80 t + 1.117 1.65 (1.117) 2 (1,117)³ 1.50 3 3+1.40 (1.11714 =4.9/4 =1.227 C. What is the share price at the end of 2023? Х

5. The past four dividends for the Zywicki Corporation are shown below. Calculate dividend D_1 by applying the historical (arithmetic) average growth rate of dividends. Compute the expected share price at the end of 2023 using the perpetual dividend growth method. Assume the market risk premium is 11.7 percent, Treasury bills yield 5.9 percent, and the beta of the firm is 0.88. (6 POINTS) Dividend, $ Year 2023 2022 2021 2020 1.80 1.65 1.50 1.40 A. What is the historic, arithmetic average growth rate? $1.23 X B. What is the discount rate, k? 11.7% X P = 1.80 t + 1.117 1.65 (1.117) 2 (1,117)³ 1.50 3 3+1.40 (1.11714 =4.9/4 =1.227 C. What is the share price at the end of 2023? Х

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 18MC
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5. The past four dividends for the Zywicki Corporation are shown below. Calculate dividend D_1 by applying the historical (arithmetic) average growth rate of dividends. Compute the expected share price at the end of 2023 using the perpetual dividend growth method. Assume the market risk premium is 11.7 percent, Treasury bills yield 5.9 percent, and the beta of the firm is 0.88. (6 POINTS) Dividend, $ Year 2023 2022 2021 2020 1.80 1.65 1.50 1.40 A. What is the historic, arithmetic average growth rate? $1.23 X B. What is the discount rate, k? 11.7% X P = 1.80 t + 1.117 1.65 (1.117) 2 (1,117)³ 1.50 3 3+1.40 (1.11714 =4.9/4 =1.227 C. What is the share price at the end of 2023? Х
Transcribed Image Text:5. The past four dividends for the Zywicki Corporation are shown below. Calculate dividend D_1 by applying the historical (arithmetic) average growth rate of dividends. Compute the expected share price at the end of 2023 using the perpetual dividend growth method. Assume the market risk premium is 11.7 percent, Treasury bills yield 5.9 percent, and the beta of the firm is 0.88. (6 POINTS) Dividend, $ Year 2023 2022 2021 2020 1.80 1.65 1.50 1.40 A. What is the historic, arithmetic average growth rate? $1.23 X B. What is the discount rate, k? 11.7% X P = 1.80 t + 1.117 1.65 (1.117) 2 (1,117)³ 1.50 3 3+1.40 (1.11714 =4.9/4 =1.227 C. What is the share price at the end of 2023? Х
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