Zenith Propulsion, Inc., is expected to pay a dividend next year of $2.15 per share. Investors think that Zenith will continue to increase its dividend by 6% each year for the foreseeable future.
If the required rate of return on Zenith stock is 14%, then what is Zenith's stock price? Round your answer to two decimal places.
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Investors expect Zenith to pay out 50% of its earnings as dividends. What is Zenith's price/earnings ratio? (Here P/E is defined as current price divided by next year's earnings.) Round your answer to two decimal places.
Maintaining all the other assumptions, recalculate Zenith's stock price if investors expect dividends to grow at 7% per year rather than at 6%? Round your answer to two decimal places.
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Maintaining all the other assumptions, recalculate Zenith's P/E ratio if investors expect dividends to grow at 7% per year rather than at 6%? Round your answer to two decimal places.