Dividends of Googly are expected to grow at 20% per year during the next 3 years, 15% during the 4th and the 5th year, 10% during the 6th year, no growth during the 7th year, and then decline at 3% per year indefinitely. Googly’s current stock price is $73.95 and has a required rate of return is 16%. Answer this: What is the projected dividend for year 3? Ama zon bought the stock today. Suppose she can reinvest the dividends earning 7% a year. What annual compound rate of return she could realize if she sells the stock after 5 years (right after getting the 5th dividend)? Suppose micra soft will buy the stock 4 years from now and sell it after holding it for one year. Determine his dividend yield, capital gain yield, and the total yield.
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.
Dividends of Googly are expected to grow at 20% per year during the next 3 years, 15% during the 4th and the 5th year, 10% during the 6th year, no growth during the 7th year, and then decline at 3% per year indefinitely. Googly’s current stock price is $73.95 and has a required
Answer this:
What is the projected dividend for year 3?
Ama zon bought the stock today. Suppose she can reinvest the dividends earning 7% a year. What annual compound rate of return she could realize if she sells the stock after 5 years (right after getting the 5th dividend)?
Suppose micra soft will buy the stock 4 years from now and sell it after holding it for one year. Determine his dividend yield,
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