a. What is the capital gain in stock price from year O to year 1? (Do not round intermediate calculations. Enter your answer as a dollar amount rounded to 3 decimal places.) Capital gain b. Calculate the expected rate of return. (Do not round intermediate calculations. Round your answer to the nearest whole percent.) Expected rate of return %

a. What is the capital gain in stock price from year O to year 1? (Do not round intermediate calculations. Enter your answer as a dollar amount rounded to 3 decimal places.) Capital gain b. Calculate the expected rate of return. (Do not round intermediate calculations. Round your answer to the nearest whole percent.) Expected rate of return %

Name: Tattletale News Corp. has been growing at a rate of 20% per year, and
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Description: Tattletale News Corp. has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends tocontinue for another 3 years. The last dividend paid was $12. The discount rate is 25% and the steady growth rate after 3 y

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 21P

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Tettletale News Corp has been growing at a rate of 10% per year, and you expect this growth rate in earnings and dividends to continue for another 3 years. The last dividend paid was $5. The discount rate is 23% and the steady growth rate after 3 years is 2%. a. What is the capital gain in stock price from year O to year 1? (Do not round intermediate calculations. Enter your answer as a dollar amount rounded to 2 decimal places.) Capital gain 1 26 b. Calculate the expected rate of return (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected rate of retum 24 87 %
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