A company has common stock which paid a dividend of $2.75 per share last year. The company expects that earnings and dividends will grow by 15% for the next tw years before dropping to a constant 9% growth rate afterward. The required rate of return is 13%. 4 a) What is the current price per share of the stock? b) What is the expected market price of the share in one year? c) Calculate the expected dividend yield at the end of the first year d) Calculate the expected capital gains yield at the end of the first year

A company has common stock which paid a dividend of $2.75 per share last year. The company expects that earnings and dividends will grow by 15% for the next tw years before dropping to a constant 9% growth rate afterward. The required rate of return is 13%. 4 a) What is the current price per share of the stock? b) What is the expected market price of the share in one year? c) Calculate the expected dividend yield at the end of the first year d) Calculate the expected capital gains yield at the end of the first year

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 16MC: Assume that Temp Force is a constant growth company whose last dividend (D0, which was paid...

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