Provide correct answer general Accounting A company, AlphaTech Inc., has its stock trading at$65 per share. Next year, the company is expectedto pay a $3.50 dividend, and dividends have beengrowing at a 5% rate.a. What rate of return do investors require from thisstock?b. What is the dividend yield?c. What is the capital gain yield?

Step 1: Define Required Rate of ReturnThe required rate of return is the minimum return that…

Answered: A company, AlphaTech Inc., has its…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 18MC

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Assume that Temp Force is a constant growth company whose last dividend (D0, which was paid yesterday) was 2.00 and whose dividend is expected to grow indefinitely at a 6% rate. (1) What is the firms current estimated intrinsic stock price? (2) What is the stocks expected value 1 year from now? (3) What are the expected dividend yield, the expected capital gains yield, and the expected total return during the first year?
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Blue is currently selling for $26 per share. Its next dividend (in one year) is forecasted to be $1. Immediately after the dividend is paid, you expect the price to be $33. a. What is its expected dividend yield? b. What is its expected capital gain rate? c. What is the equity investors' expected return? Question content area bottom Part 1 a. Dividend yield: enter your response here%. (Round to two decimal places.) b. Capital gain rate: enter your response here%. (Round to two decimal places.) c. Expected Return: enter your response here%. (Round to two decimal places.)

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A company, AlphaTech Inc., has its stock trading at $65 per share. Next year, the company is expected to pay a $3.50 dividend, and dividends have been growing at a 5% rate. a. What rate of return do investors require from this stock? b. What is the dividend yield? c. What is the capital gain yield?