None If investors expect a 14% return on a $50 stock thatpays a dividend of $2.50, what is the impliedcapital gain rate?

To find the implied capital gain rate, we can use the total return formula, which is the sum of the…

Answered: If investors expect a 14% return on a…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section7.4: Valuing Common Stocks

Problem 3ST

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If investors expect a 14% return on a $50 stock that pays a dividend of $2.50, what is the implied capital gain rate?
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A stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $56. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case? A Required What is the total rate of return for the stock? B Required What is the dividend yield and percentage capital gain? C Required Now suppose the year-end stock price after the dividend is paid is $48. What are the dividend yield and percentage capital gain in this case? (Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.)
A stock sells for $ 49.14 . The next dividend will be $ 2.58 per share. If the expected return is 15 %, what must be the expected growth of the stock?

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If investors expect a 14% return on a $50 stock that pays a dividend of $2.50, what is the implied capital gain rate?