Suppose that one year ago you bought 100 shares of SodaCo for $10 per share with the
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Suppose that one year ago you bought 100 shares of SodaCo for $10 per share with the expectation of receiving a perpetual dividend of $1 per share. What was your expected annual percentage return on this investment? Today, SodaCo announces that it will increase its annual dividend to $2 per share.
Upon announcement, the stock price rises to $20. If you then sell the stock, what percentage returnwould you realize on your investment?What annual returnwould the buyer of your stock expect in the future? Why is there such a difference in returns?
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Related Book For 
Valuation Measuring And Managing The Value Of Companies University Edition
ISBN: 978-1118873731
6th Edition
Authors: Mckinsey & Company Inc. ,Tim Koller ,Marc Goedhart ,David Wessels
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