Integrative-Risk and valuation Giant Enterprises' stock has a required return of 14.2%. The company, which plans to pay a dividend of $1.84 per share in the coming year, anticipates that its future dividends will increase at an annual rate consistent with that experienced over 2013-2019 period, when the following dividends were paid: E. a. If the risk-free rate is 6%, what is the risk premium on Giant's stock? b. Using the constant-growth model, estimate the value of Giant's stock. (Hint: Round the computed dividend growth rate to the nearest whole percent.) c. Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock. a. If the risk-free rate is 6%, the risk premium on Giant's stock is %. (Round to one decimal place.) b. Using the constant-growth model, the value of Giant's stock is $. (Round to the nearest cent.) c. Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock. (Select from the drop-down menus.) A decrease in the risk premium would the required rate of return, which in turn would the price of the stock. Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year Dividend per Share P 2019 $1.72 $1.61 $1.50 2018 2017 $1.40 $1.31 $1.23 $1.15 2016 2015 2014 2013

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.