Answered: A share valued at $254.75 pays…

A share valued at $254.75 pays quarterly dividends in perpetuity at a rate of return of 5.75% compounded semi-annually. Calculate the end-of-quarter dividends. Round to the nearest cent

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 17P

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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

A share valued at $254.75 pays quarterly dividends in perpetuity at a rate of return of
5.75% compounded semi-annually. Calculate the end-of-quarter dividends.
Round to the nearest cent

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