Consider four different stocks, all of which have a required return of 18.75 percent and a most recent dividend of $3.45 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10.5 percent, O percent, and -5.25 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.75 percent for the next two years and then maintain a constant 12.5 percent growth rate, thereafter. (Hint: Z is like the last stock on the Stock Problems video.) a. What is the dividend yield for each of these four stocks? (Do not round Intermedlate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the expected capital gains yield for each of these four stocks? (A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "O" wherever required. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock W dividend yield Stock X dividend yield Stock Y dividend yield Stock Z dividend yield b. 96 96 96 Stock W capital gains yield Stock X capital gains yield Stock Y capital gains yield Stock Z capital gains yield % 96 96 96 96
Consider four different stocks, all of which have a required return of 18.75 percent and a most recent dividend of $3.45 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10.5 percent, O percent, and -5.25 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.75 percent for the next two years and then maintain a constant 12.5 percent growth rate, thereafter. (Hint: Z is like the last stock on the Stock Problems video.) a. What is the dividend yield for each of these four stocks? (Do not round Intermedlate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the expected capital gains yield for each of these four stocks? (A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "O" wherever required. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock W dividend yield Stock X dividend yield Stock Y dividend yield Stock Z dividend yield b. 96 96 96 Stock W capital gains yield Stock X capital gains yield Stock Y capital gains yield Stock Z capital gains yield % 96 96 96 96
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 18MC
Related questions
Question
| What is the dividend yield for each of these four stocks? |
| What is the expected |
Transcribed Image Text:Consider four different stocks, all of which have a required return of 18.75 percent and a
most recent dividend of $3.45 per share. Stocks W, X, and Y are expected to maintain
constant growth rates in dividends for the foreseeable future of 10.5 percent, O percent,
and -5.25 percent per year, respectively. Stock Z is a growth stock that will increase its
dividend by 20.75 percent for the next two years and then maintain a constant 12.5
percent growth rate, thereafter. (Hint: Z is like the last stock on the Stock Problems
video.)
a. What is the dividend yield for each of these four stocks? (Do not round Intermedlate
calculations and enter your answers as a percent rounded to 2 decimal places,
e.g., 32.16.)
b. What is the expected capital gains yield for each of these four stocks? (A negative
answer should be indicated by a minus sign. Leave no cells blank - be certain to
enter "O" wherever required. Do not round Intermediate calculations and enter
your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
a.
Stock W dividend yield
Stock X dividend yield
Stock Y dividend yield
Stock Z dividend yield
b.
96
96
96
Stock W capital gains yield
Stock X capital gains yield
Stock Y capital gains yield
Stock Z capital gains yield
%
96
96
96
96
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