Question
The questions below are linked together. Answer to each part is in (..) . I am having trouble figuring out part 4. I am not
The questions below are linked together. Answer to each part is in "(..)". I am having trouble figuring out part 4. I am not able to get the answer 24.66 Please show me how to do question 4. Also in number 3 for capital gains yield do we automatically assume the growth in 2 to be Capital Gains Yield or is there a calculation for it?
1.Last year Trumpco paid a 2.30 per share dividend. The beta is 2.1, the market is expected to earn 10%, and the risk free rate is 3%. If dividends remain at 2.30 per year forever, what is a fair price? (12.99)
2.What if Trumpco's dividends grow at 6% per year forever? (20.84)
3.Find the dividend yield and capital gains yield for the stock in number 4. (.117 and .06)
4.What if Trumpco's dividends grow at 4% for one year, than at 8% forever after that? (24.66)
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