Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please note I only need help with parts e,f and g of the question with detailed formulas. Yesterday, September 22, 2009, Wireless Logic Corp. (WLC)

Please note I only need help with parts e,f and g of the question with detailed formulas.

Yesterday, September 22, 2009, Wireless Logic Corp. (WLC) paid its annual dividend of $1.25 per share. Because WLCs financial prospects are particularly bright, investors believe that the company will increase its dividend by 20 percent per year for the next four years. After that, WLC will increase the dividend at a modest annual rate of 4 percent. Investors require a 16 percent return on WLC stock, and WLC always makes its dividend payment on September 22 of each year.

a. What is the price of WLC stock on September 23, 2009?

b. What is the price of WLC stock on September 23, 2010?

c. Calculate the percentage change in price of WLC stock from September 23, 2009, to September 23, 2010.

d. For an investor who purchased WLC stock on September 23, 2009, received a dividend on September 22, 2010, and sold the stock on September 23, 2010, what was the total rate of return on the investment? How much of this return came from the dividend, and how much came from the capital gain?

e. What is the price of WLC stock on September 23, 2013?

f. What is the price of WLC stock on September 23, 2014?

g. For an investor who purchased WLC stock on September 23, 2013, received a dividend on September 22, 2014, and sold the stock on September 23, 2014, what was the total rate of return on the investment? How much of this return came from the dividend, and how much came from the capital gain? Comment on the differences between your answers to this question and your answers to part (d).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Short Term Financial Management

Authors: Terry S. Maness, John T. Zietlow

3rd Edition

0324202938, 978-0324202939

More Books

Students also viewed these Finance questions

Question

Derive expressions for the rates of forward and reverse reactions?

Answered: 1 week ago

Question

Write an expression for half-life and explain it with a diagram.

Answered: 1 week ago

Question

What do you mean by underwriting of shares ?

Answered: 1 week ago

Question

Define "Rights Issue".

Answered: 1 week ago

Question

Persuasive Speaking Organizing Patterns in Persuasive Speaking?

Answered: 1 week ago