# Dividend from Financial StatementsStockholder'sCashDividendYearStock PriceEquity (in millions)Div/share (S)Yield3.00% S2.70% S2.60% S97.3320152.922,491.0020163.12429.00115.5620173.321,030.00127.69 3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated aboveCashReturn onYearDiv/ShareStock PriceInvestment(\$)+1.75\$\$CALCULATE ROI2015201620174.6797.334.875.0723.72% [(Dividends \$1.75) (new price old price)]/ (old price)14.89% [(Dividends \$1.75) (new price - old price)]/ (old price)115.56\$127.69

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What effect would the calculation performed have in terms of shareholder value? In other words, suppose the company’s goal is to maximize shareholder value. How will the rate of return on equity (increase dividend per share by 1.75) support or inhibit that goal? Be sure to justify reasoning.

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Step 1

The increase in cash dividend would increase the dividend yield of the stock. For Year 2016, dividend increased from \$3.12 to \$4.87. So, the dividend yield for the stock i...

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