Varigrowth Inc. just paid a dividend of $1.96 (i.e., Do = $1.96). Such dividend is expected to grow by 10% per year for the next 3 years, after which it is expected to grow at a long-run rate of 4%. Assuming investors require a 14% return on the stock, a) What is the price at t=3? $ 13 (to the nearest cent) b) What is its price today? $ (to the nearest cent) c) What is your total rate of return (% to two decimals) if in one year the price is $23.56 and the dividend is $2.12? What is your capital gain (loss) yield? % What is your dividend yield?

Varigrowth Inc. just paid a dividend of $1.96 (i.e., Do = $1.96). Such dividend is expected to grow by 10% per year for the next 3 years, after which it is expected to grow at a long-run rate of 4%. Assuming investors require a 14% return on the stock, a) What is the price at t=3? $ 13 (to the nearest cent) b) What is its price today? $ (to the nearest cent) c) What is your total rate of return (% to two decimals) if in one year the price is $23.56 and the dividend is $2.12? What is your capital gain (loss) yield? % What is your dividend yield?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 24P: Conroy Consulting Corporation (CCC) has a current dividend of D0 = $2.5. Shareholders require a 12%...

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