Calculate expected dividend yield.

Assignment Help Financial Management
Reference no: EM131450890

You buy a share of The Ludwig Corporation stock for $21.90. You expect it to pay dividends of $1.05, $1.15, and $1.2595 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $30.87 at the end of 3 years. Calculate the growth rate in dividends. Round your answer to two decimal places. % Calculate the expected dividend yield. Round your answer to two decimal places. % Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to two decimal places.

Reference no: EM131450890

Questions Cloud

What is the ask quote for yen in terms of euros : Suppose the spot quotes for the Japanese yen and euros are $.0073-81 and $1.125-45, respectively. What is the ask quote for yen in terms of euros
Financial reports particularly the importance of budgets : Provide your thoughts on the importance of internal financial reports particularly the importance of budgets in managing resources and obligations of company
Value of safeco stock when the required return : What is the value of Safeco stock when the required return is 15 percent?
Applying for a bank loan than by issuing bonds : Explain why a person starting up a small business probably stands a better chance of raising money by applying for a bank loan than by issuing bonds.
Calculate expected dividend yield. : Calculate the growth rate in dividends. Calculate the expected dividend yield.
Comprehensive-an in-depth or in-detailed summary : THEN particularly identify and explain why financial crisis in 2008 has happened according to Alan Greenspan’s perspective.
Equilibrium with required return equal to expected return : assume the market is in equilibrium with the required return equal to the expected return
How much is this bond worth today : Furthermore, assume that you can invest all you want at a rate of 8%. How much is this bond worth today?
What is the required rate of return on your company stock : Assume that the average firm in your company's industry is expected to grow at a constant rate of 6%. What is required rate of return on your company's stock?

Reviews

Write a Review

Financial Management Questions & Answers

  What price does uma expect wallnut to sell for in one year

Ima's sister, Uma, has completed her own analysis of the economy and Wallnut's stock. Uma used recession, constant growth, and inflation scenarios, but with different probabilities and expected stock returns.

  What is your estimate of yubaba stock price four years

The Yubaba Company has so far not paid a dividend on its stock. Investors believe that the Company won’t pay a dividend next year, but that it will pay dividends starting two years from now. The dividend then is expected to be $0.20 per share. What i..

  How much you have accumulated in account at the end

How much will you have accumulated in the account at the end of the following number of years?- Compare and contrast your findings in part (b).

  For your final paper you will choose one of the health care

the final paper 8-10 pages excluding title and reference pages should demonstrate understanding of the reading

  Balance sheet at the end of operation

Tiles Limited had the following balance sheet at the end of operation for 2015 and 2016 respectively TILES LTD as at Dec. 2015 as at Dec. 2016

  After-tax profit margin is forecasted

Broussard Skateboard's sales are expected to increase by 20% from $8.6 million in 2013 to $10.32 million in 2014. Its assets totalled $5 million at the end of 2013. Baxter is already at full capacity, so its assets must grow at the same rate as proje..

  Cost of new common stock financing is higher than the cost

The cost of new common stock financing is higher than the cost of retained earnings due to _____.

  Statement regarding executive stock-lower risk free rates

Lower risk free rates results in __________ Put Option prices and ______ Call Option Prices. Which statement regarding executive stock options is correct?

  What are the forecast for outstanding receivables

A health system has forecast net patient revenue in the first 3 months of the year as follows (figures in millions): January, $200; February, $140; March, $200. 70% of services are usually paid for in the month that they take place, 20% in the follow..

  Calculate the Net Present Value-NPVA and NPVB

Scanlon Inc. is considering Projects A and B, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forg..

  Which company will keep constant growth rate forever

Storico Co. just paid a dividend of $1.90 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent divid..

  Which security is riskier

Stock A has an expected return of 7%, a standard deviation of expected returns of 35%, a coefficient with the market of -0.3, and a beta coefficient of -0.5. Stock B has an expected return of 12%, a standard deviation of return of 10%, a 0.7 correlat..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd