What is the required rate of return, Financial Accounting

a) Company X is expected to maintain a constant 7% growth rate in their dividends, indefinitely. If the company has a dividend yield of 4%, what is the required return on their shares?

b) Company Y shares currently sell for $60 per share. The required rate of return is 14% on their shares. If the company maintains a constant 7% growth rate in dividends, what was the most recent dividend paid per share?

c) Company Z next dividend payment will be $3,50 per share. Dividends are expected to maintain an annual growth rate of 6% in perpetuity. If the company shares are presently selling at a market price of $55:

  1. What is the required rate of return?
  2. What is the dividend yield?
  3. What is the expected capital gains yield?
Posted Date: 3/19/2013 5:50:55 AM | Location : United States

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