ABC company started its business 5 years ago and was growing at a high rate during that period. Available historical data indicates that during this stage, the company DPS was $1.00. This year (starting today) that management expects the company to start its second stage of growth and declared $2.00 DPS. The management is expecting 18% growth every year for the next 6 years. Given the risk involved, the management estimated that shareholders required rate of return to be 15%. Currently, ABC stock is selling in the market for $41.25 per share. balance sheet of ABC indicates that the company is using $2,000,000 of debt at 5%, it has 10,000 outstanding shares, and its DFL is 1.5. ABC marginal tax rate is 40%. Risk free rate in the economy is 4%, and the market portfolio risk premium is 5%. Assume the stock price at the beginning of stage 3 is $65 per share, and the growth rate during stage 3 is 3%. Use this information to calculate:

(i) The payout ratio of stage 3.

(ii) The growth rate of stock price during stage 2.