Suppose you know a company\'s stock currently sells for $70 per share and the re

Question

Suppose you know a company's stock currently sells for $70 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield.

If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

Suppose you know a company's stock currently sells for $70 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield.

Explanation / Answer

HPR = P1-P0+D1/P0 .09%= 70-X+9/X P1= 72

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.