6. Nielson Motors has a share price of $25 today. If Nielson Motors is expected to pay a dividend of $0.75 this year, and its stock price is expected to grow to $26.75 at the end of the year, then Nielson's dividend yield and equity cost of capital are: A) 3.0% and 7.0% respectively. B) 3.0% and 10.0% respectively. C) 4.0% and 6.0% respectively. D) 4.0% and 10.0% respectively.

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 1P: Thress Industries just paid a dividend of 1.50 a share (i.e., D0 = 1.50). The dividend is expected...
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6. Nielson Motors has a share price of $25 today. If Nielson Motors is expected to pay a
dividend of $0.75 this year, and its stock price is expected to grow to $26.75 at the end of
the year, then Nielson's dividend yield and equity cost of capital are:
A) 3.0% and 7.0% respectively.
B) 3.0% and 10.0% respectively.
C) 4.0% and 6.0% respectively.
D) 4.0% and 10.0% respectively.
Transcribed Image Text:6. Nielson Motors has a share price of $25 today. If Nielson Motors is expected to pay a dividend of $0.75 this year, and its stock price is expected to grow to $26.75 at the end of the year, then Nielson's dividend yield and equity cost of capital are: A) 3.0% and 7.0% respectively. B) 3.0% and 10.0% respectively. C) 4.0% and 6.0% respectively. D) 4.0% and 10.0% respectively.
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