Assume that TechnoCo is a constant growth company whose last dividend (D0 , which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 6% rate. The appropriate (required) rate of return for TechnoCo stock is 16%.

What are

1) the expected dividend yield

2) the capital gains yield

3) the total return during the first year?

Assume that TechnoCos stock is currently selling at $21.20. What is the expected rate of return on the stock?

What would the stock price be if its dividends were expected to have zero growth?