Question
Super Carpeting Inc. just paid a dividend ( D 0) of $1.92, and its dividend is expected to grow at a constant rate (g) of
Super Carpeting Inc. just paid a dividend (D0) of $1.92, and its dividend is expected to grow at a constant rate (g) of 2.80% per year.
If the required return (rs) on Supers stock is 7.00%, then the intrinsic, or theoretical market, value of Supers shares is$46.90 per share.
Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting Inc.:
If Supers stock is in equilibrium, the current expected dividend yield on the stock will be per share
a) 4.31% b)4.09% c) 2.87% d) 4.20%
Supers expected stock price one year from today will be per share
a)$48.33 b)$29.00 c)$45.71 d) $46.90
If Super Stock is in equilibrium, the current expected capital gain yields on Super's stock will be per share
a) 103.05% b) 2.75% c) 3.66% d) 3.05%
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