Phoenix Industries has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Today, it announced a $4 per share dividend to be paid a year from now, the first dividend since the crisis. Analysts expect dividends to increase by $1 a year for another 2 years. After the third year (in which dividends are $6 per share), dividend growth is expected to settle down to a more moderate long- term growth rate of 6%. If the firm's investors expect to earn a return of 16% on this stock, what must be its price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Current price

Phoenix Industries has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Today, it announced a $4 per share dividend to be paid a year from now, the first dividend since the crisis. Analysts expect dividends to increase by $1 a year for another 2 years. After the third year (in which dividends are $6 per share), dividend growth is expected to settle down to a more moderate long- term growth rate of 6%. If the firm's investors expect to earn a return of 16% on this stock, what must be its price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Current price

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 19P

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