question 4, thanks

"Dividend"ed We Stand (Due Monday, October 28) Gordon Dividend Discount Model with Growth LewCo, a construction company, pays an annual dividend on December 31" of each year. LewCo paid a dividend of $10 per share on December 31, 2019 (ex-date). LewCo increased the dividend by 6% per year since the company started in 1958. 1. Today is January 2, 2020, and the current stock price is $400 per share. What expected return (r*, discount rate, cost of capital) are investors attaching to LewCo based on the dividend discount model? 400 = 88 Y: 8.5 2. Based on the model, what will be the price of the stock on January 2, 2021? Remember that the company pays a dividend on December 31" of each year. D(ug) lo(468) rg 8:51-61 = 424 - Assume an investor purchased $100,000 of LewCo stock January 2, 2020, and liquidated (sold) it a year later on January 2, 2021, after receiving the dividend payment. A. What would be the investor's price return or capital gain (percent and dollars)? Too 400 219 24-200= boop t capital gain B. What would be the investor's total return (percent and dollars)? total retum capital gaint Div Div 100 22:51 Payout the be + 2x 20 C. The tax on long-term capital gains is 15%, and the tax on regular income is 35%. Half of the dividend qualifies for long-term capital gains treatment, the other half is regular income. The investor held the stock for more than a year (barely), so she receives long- term capital gains on the price appreciation. What is the after-tax rate of return? LTCG=6w0 + 1280 x 720 from half of the liv Tarers 7280x134: 1087.5 2 1280 x 384: 437.5 200-13875-4373=6975 6975 +6.186