REC gave a current dividend (in 2022) of 153% on the face value of Rs.10. Its current share price 295.75. Over the last one year, REC share price has moved up from Rs 99.1 to Rs 114.4. The table below shows the dividend per share of REC over the last five years. Year DPS Mar 2018 9.15 2019 11 2020 11 2021 12.71 2022 15.3 Further during the past 10 years, the average Dividends Per Share Growth Rate was 12.80% per year. REC is expected to grow at this rate for a period of 6 years and thereafter, if the growth rate will fall and stabilize at 8% afterwards. 1 Calculate the dividend vield

REC gave a current dividend (in 2022) of 153% on the face value of Rs.10. Its current share price 295.75. Over the last one year, REC share price has moved up from Rs 99.1 to Rs 114.4. The table below shows the dividend per share of REC over the last five years. Year DPS Mar 2018 9.15 2019 11 2020 11 2021 12.71 2022 15.3 Further during the past 10 years, the average Dividends Per Share Growth Rate was 12.80% per year. REC is expected to grow at this rate for a period of 6 years and thereafter, if the growth rate will fall and stabilize at 8% afterwards. 1 Calculate the dividend vield

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.

Question

9. REC gave a current dividend (in 2022) of 153% on the face value of Rs.10. Its current share price is
395.75. Over the last one year, REC share price has moved up from Rs 99.1 to Rs 114.4. The table
below shows the dividend per share of REC over the last five years.
Year
DPS
Mar 2018
9.15
2019
11
2020
11
2021
12.71
2022
15.3
Further during the past 10 years, the average Dividends Per Share Growth Rate was 12.80% per
year. REC is expected to grow at this rate for a period of 6 years and thereafter, if the growth rate will
fall and stabilize at 8% afterwards.
1. Calculate the dividend yield
2. Calculate the 5-year average DPS growth rate
3. Calculate the capital gain / loss
4. If REC's WACC is 10%, what will be the intrinsic value of REC's stock?

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