Bartman Industries' and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2015-2020. The Winslow 5000 data are adjusted to include dividends. 1.) Use the data to calculate annual rates of return for Bartman, Reynolds, and the Winslow 5000 Index. Then calculate each entity's average return over the 5-year period. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already included in the index. Also, the rates of return for 2015 are not avaiable because 2014 data are not given). Bartman Industries Reynolds Inc. Winslow 5000 Year Stock Price Dividend Holding period return Stock Price Dividend Holding period return Includes Divs. Holding period return 2020 $17.25 $1.15 $48.75 $3.00 11,663.98 2019 14.75 1.06 52.30 2.90 8,785.70 2018 16.50 1.00 48.75 2.75 8,679.98 2017 10.75 0.95 57.25 2.50 6,434.03 2016 11.37 0.90 60.00 2.25
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Bartman Industries' and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 2015-2020. The Winslow 5000 data are adjusted to include dividends.
1.) Use the data to calculate annual
| Bartman Industries | Reynolds Inc. | Winslow 5000 | ||||||
| Year | Stock Price | Dividend | Holding period return | Stock Price | Dividend | Holding period return | Includes Divs. | Holding period return |
| 2020 | $17.25 | $1.15 | $48.75 | $3.00 | 11,663.98 | |||
| 2019 | 14.75 | 1.06 | 52.30 | 2.90 | 8,785.70 | |||
| 2018 | 16.50 | 1.00 | 48.75 | 2.75 | 8,679.98 | |||
| 2017 | 10.75 | 0.95 | 57.25 | 2.50 | 6,434.03 | |||
| 2016 | 11.37 | 0.90 | 60.00 | 2.25 | 5,602.28 | |||
| 2015 | 7.62 | 55.75 | 4,705.97 |
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