Consider four different stocks, all of which have a required return of 18.25 percent and a most recent dividend of $3.10 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 11 percent, 0 percent, and -5.5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.25 percent for the next two years and then maintain a constant 13 percent growth rate, thereafter. a. What is the dividend yield for each of these four stocks? Note: Do not round intermediate 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? Note: 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. Stock W capital gains yield % Stock X capital gains yield % Stock Y capital gains yield % Stock Z capital gains yield %
Consider four different stocks, all of which have a required return of 18.25 percent and a most recent dividend of $3.10 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 11 percent, 0 percent, and -5.5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.25 percent for the next two years and then maintain a constant 13 percent growth rate, thereafter. a. What is the dividend yield for each of these four stocks? Note: Do not round intermediate 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? Note: 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. Stock W capital gains yield % Stock X capital gains yield % Stock Y capital gains yield % Stock Z capital gains yield %
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
Baghiben
![Consider four different stocks, all of which have a required return of 18.25 percent and a most recent dividend of $3.10 per share.
Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 11 percent, 0 percent, and
-5.5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.25 percent for the next two years
and then maintain a constant 13 percent growth rate, thereafter.
a. What is the dividend yield for each of these four stocks?
Note: Do not round intermediate 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?
Note: 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. Stock W capital gains yield
%
Stock X capital gains yield
%
Stock Y capital gains yield
%
Stock Z capital gains yield
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd566eeb-b715-44d6-add2-35b712fbf6db%2F7c3c130d-ce90-49c8-a587-010a92afbbd2%2F3b2ax1b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider four different stocks, all of which have a required return of 18.25 percent and a most recent dividend of $3.10 per share.
Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 11 percent, 0 percent, and
-5.5 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.25 percent for the next two years
and then maintain a constant 13 percent growth rate, thereafter.
a. What is the dividend yield for each of these four stocks?
Note: Do not round intermediate 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?
Note: 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. Stock W capital gains yield
%
Stock X capital gains yield
%
Stock Y capital gains yield
%
Stock Z capital gains yield
%
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)