The next dividend payment by Wyatt, Inc., will be $3.10 per share. The dividends
ID: 2651557 • Letter: T
Question
The next dividend payment by Wyatt, Inc., will be $3.10 per share. The dividends are anticipated to maintain a growth rate of 3.75 percent, forever.
If the stock currently sells for $49.80 per share, what is the required return? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
The next dividend payment by Wyatt, Inc., will be $3.05 per share. The dividends are anticipated to maintain a growth rate of 6.00 percent, forever. Assume the stock currently sells for $49.70 per share.
What is the dividend yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
What is the expected capital gains yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
The next dividend payment by Wyatt, Inc., will be $3.10 per share. The dividends are anticipated to maintain a growth rate of 3.75 percent, forever.
Explanation / Answer
The next dividend payment by Wyatt, Inc., will be $3.10 per share. The dividends are anticipated to maintain a growth rate of 3.75 percent, forever.
Required:If the stock currently sells for $49.80 per share, what is the required return? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Required return = Expected Dividend/Current Share Price + growth rate
Required return = 3.10/49.80 + 3.75%
Required return = 9.97%
The next dividend payment by Wyatt, Inc., will be $3.05 per share. The dividends are anticipated to maintain a growth rate of 6.00 percent, forever. Assume the stock currently sells for $49.70 per share.
Requirement 1:What is the dividend yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Dividend yield = Expected Dividend/Current Stock Price
Dividend yield = 3.05/49.70
Dividend yield = 6.14%
Requirement 2:What is the expected capital gains yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Capital gains yield = Constant growth rate
Capital gains yield = 6%
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