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The current price of Janco stock is $16.77. Dividends are expected to grow at 4.4% indefinitely and the most recent dividend paid yesterday was $3.93. What is the required rate of return, dividend yield, and capital gains yield on Janco’s stock? (show your answers to 4 decimal places)

Respuesta :

Answer:

Required return= 28.87%

Dividend yield= 24.4658%

Capital gains yield= 4.4%

Explanation:

Required return=(D1/Current price)+Growth rate

=(3.93*1.044)/16.77+0.044

=28.8658%(or 0.2887 approx)

Dividend yield=Dividend for next period/Current price

=(3.93*1.044)/16.77

=24.4658%(or 0.2447 approx)

Capital gains yield=Growth Rate

=4.4%(or 0.044)

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