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Problem 8-32 Capital Gains versus Income (LO1] Consider four different stocks, all of which have a required return of 20 percent and a most recent
Problem 8-32 Capital Gains versus Income (LO1] Consider four different stocks, all of which have a required return of 20 percent and a most recent dividend of $5.00 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, o percent, and 5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 10 percent growth rate thereafter. What is the dividend yield and capital gains yield for each of these four stocks? (Leave no cells blank - be certain to enter "O" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 1 decimal place, e.g., 32.1.) X Answer is complete but not entirely correct. Dividend yield Capital gains yield 10.0 % Stock W 10.0 % Stock W Stock X 20.0 % Stock X 0 % Stock Y 25.0 % Stock Y -5.0 % Stock Z 59.5 % Stock Z 9.9 X %
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