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40. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, De-3.25). Investors Expect the diVidend to grow at 45% in years I and 2, they expect the dividend to grow at 25% in year 5 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 15%, what is the current price of the stock? +10mar

40. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, De-3.25). Investors Expect the diVidend to grow at 45% in years I and 2, they expect the dividend to grow at 25% in year 5 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 15%, what is the current price of the stock? +10mar

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter7: Stocks (equity) - Characterstics And Valuation
Section: Chapter Questions
Problem 14PROB
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o. Fhilips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, Do- 3.25). Investors expect the dividend to grow at 45% in years I and 2, they expect the dividend to grow at 25%% in year 5 and they expect that all future dividends (that is, dividends in years 4, 5, . infinity) to grow at ostant rate of 5% per year. If the cost of capital for Phillips, Inc. stock is 15%, what is the current price of the stock?
Transcribed Image Text:o. Fhilips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, Do- 3.25). Investors expect the dividend to grow at 45% in years I and 2, they expect the dividend to grow at 25%% in year 5 and they expect that all future dividends (that is, dividends in years 4, 5, . infinity) to grow at ostant rate of 5% per year. If the cost of capital for Phillips, Inc. stock is 15%, what is the current price of the stock?
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