Question
Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has
Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of $4 er share per year for the last 18 years. Management expects to continue to pay at that amount for the foreseeable future. Sally Talbot purchased 400 shares of Kelsey class A common 7 years ago at a time when the required rate of return for the stock was 14%. She wants to sell her shares today. The current required rate of return for the stock is 17%. How much total capital gain or loss will Sally have on her shares?
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