Question
a. You just purchased a share of SPCC for $100. You expect to receive a dividend of $5 in one year. If you expect the
a. You just purchased a share of SPCC for $100. You expect to receive a dividend of $5 in one year. If you expect the price after the dividend is paid to be $110, what toal return will you have earned over the year? What was your dividend yield? Your capital gain rate? The total return you will have earned over the year is _____%. (Round to two decimal places)
b. NoGrowth Corporation currently pays a dividend of $0.42 per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital is 15.7%? The stock price is $_____. (Round to the nearest cent)
c. Summit Systems will pay a dividend of $1.50 this year. If you expect Summit's dividend to grow by 6.0% per year, what is its price per share if the firm's equity cost of capital is 11.0%? The price per share is $____. (Round to the nearest cent)
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