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Colonel Forbin's Kentucky Fried Mockingbird Inc. (KFM) sells fried mockingbirds using the Colonel's famous 11-herbs-and-spices recipe. KFM pays annual dividends and analysts expect the next
Colonel Forbin's Kentucky Fried Mockingbird Inc. (KFM) sells fried mockingbirds using the Colonel's famous 11-herbs-and-spices recipe. KFM pays annual dividends and analysts expect the next dividend (due in one year) to be $2.5. KFM stock trades today for $85.00 per share. If you buy the stock today, then what will your capital gain yield be for the coming year? Assume that KFM investors require a return of 9%, that dividends will grow at a constant rate in perpetuity and that the stock is fairly priced. Express your answer in percentage form rounded to two decimal places.
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