1. Dustin has analyzed five stocks and estimated the dividends they will pay nex
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Question
1. Dustin has analyzed five stocks and estimated the dividends they will pay next year as well as their prices atthe end of the year. His projections are shown below. Current Projected Projected Dividend Stock Price Stock Price $36.50 $1.50 $43.00+ $1.00 $38.00- $34.50 $60.00 $65.50 $3.00 $81.00 $72.00 None $64.80 $3.15 $63.00+ Compute the dividend yield, capital gains yield, and total one-year return implied by Dustin's estimates for each stock. Stock A Dividend Yield: Capital Gains Yield: Tota Yield Stock B- Dividend Yield: Capital Gains Yield: Tota Yield Stock C- Dividend Yield: Capital Gains Yield: Total Yield: Stock D Dividend Yield: Capital Gains Yield: Total Yield Stock E Dividend Yield: Capital Gains Yield: Total YieldExplanation / Answer
1. Dividend yield, Capital gain yield and total yield are calculated in below table.
Projected
All figures in $
Stock
Cur. Price
Dividend
Stock Price
Capital Gain
Total Gain
Dividend Yield %
Capital Gain yield %
Total Yield%
1
2
3
4
5
6
7
8
Formula
3-1
2+4
2/1*100
4/1*100
5/1*100
A
36.5
1.5
43
6.5
8
4.11
17.81
21.92
B
34.5
1
38
3.5
4.5
2.90
10.14
13.04
C
60
3
65.5
5.5
8.5
5.00
9.17
14.17
D
72
0
81
9
9
0.00
12.50
12.50
E
64.8
3.15
63
-1.8
1.35
4.86
-2.78
2.08
4.
Growth rate concept connection Example 8.2
Year
Opening stock Price
Growth rate = 10%
Year end price
A
B
A*B
0
20
1
20
1.1
22
2
22
1.1
24.2
3
24.2
1.1
26.62
4
26.62
1.1
29.282
5
29.282
1.1
32.2102
Answer : Stock price will be $32.21 in five years
Projected
All figures in $
Stock
Cur. Price
Dividend
Stock Price
Capital Gain
Total Gain
Dividend Yield %
Capital Gain yield %
Total Yield%
1
2
3
4
5
6
7
8
Formula
3-1
2+4
2/1*100
4/1*100
5/1*100
A
36.5
1.5
43
6.5
8
4.11
17.81
21.92
B
34.5
1
38
3.5
4.5
2.90
10.14
13.04
C
60
3
65.5
5.5
8.5
5.00
9.17
14.17
D
72
0
81
9
9
0.00
12.50
12.50
E
64.8
3.15
63
-1.8
1.35
4.86
-2.78
2.08
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