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Manguinnos' dividend per share is expected to grow indefinitely at 5% per year, keeping pace with the overall growth of the economy. If next


 


Manguinnos' dividend per share is expected to grow indefinitely at 5% per year, keeping pace with the overall growth of the economy. If next year's dividend is $10 and the market's required yield is 10%, what is the current share price? Marle Construcciones' stock price at January 1, 2002 is $22 and is expected to grow at 5% per year: a) What is the expected rate of return at the beginning of 2002? The expected dividend for that year would be $3. b) What was the expected dividend yield and capital gains on January 1, 2003? What is the relationship between the dividend yield and capital gains under the growth assumption?

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