Ziggs Corporation will pay a $3.95 per share dividend next year. The company ple

Question

Ziggs Corporation will pay a $3.95 per share dividend next year. The company pledges to increase its dividend by 4.25 percent per year, indefinitely.

Ziggs Corporation will pay a $3.95 per share dividend next year. The company pledges to increase its dividend by 4.25 percent per year, indefinitely dividend by 4.25 percent per year, indefini Required If you require a 10.50 percent return on your investment, how much will you pay for the company's stock today? (Select rounded answers as directed, but do not use the rounded numbers in intermediate calculations.) O $60.51 O $69.52 O $63.20 O $26.78 O $25.64

Explanation / Answer

Ziggs Corporation All Amounts in $ With an increase of 4.25% per year, the dividend for Year T = 1 will be 4.117875 $ Since the required return on the investment is 10.50%, the price to be paid for the Company's stock today will be 39.21786 $ As $ 60.51 is the closest to this value, hence that is considered as the correct solution.

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