Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose you know a company's stock currently sells for $51 per share and the required return on the stock is 0.14. You also know that

image text in transcribed
Suppose you know a company's stock currently sells for $51 per share and the required return on the stock is 0.14. You also know that the required return is evenly divided between the capital gains yield (G) and the dividend yield (D1/PO) (this means that if the required retun is 9%, the capital gains yield is 4.5% and the dividend yield is 4.5% ). If it's the company's policy to always maintain a constant growth rate in its dividends, what is the next dividend per share? Answer with 2 decimals (e.g. 1.23) Question 6 2 pts Marcel Co. is growing quickly. Dividends are expected to grow at a rate of 0.1 for the next 4 years, with the growth rate falling off to a constant 0.03 thereafter. If the required return is 0.09 and the company just paid a $1.45 dividend, what is the current share price? Answer with 2 decimals (e.g. 45.45)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions