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Assume that XYZ is a constant growth company whose last dividend was $2 with the dividend expected to grow 6% indefinitely. Calculate the following: The expected dividends for the next three years. The current stock price. The expected value in one year and The dividend yeild, capital gains yield, and total returnduring the first year.

 Jul 14, 2014

Best Answer 

 #1
avatar+118725 
+5

Umm not sure.  I didn't think that there is enough information here to answer all that.

This dividend = $2

next one = $2*1.06=$2.12

next one = $2.12*1.06 = $2.2472

next one = $2.2472*1.06 = $2.382032

This is assuming that the dividends are yearly.  In reality they are usually 6 monthly.

I don't think you have given enough information for me to answer the rest.   

 Jul 15, 2014
 #1
avatar+118725 
+5
Best Answer

Umm not sure.  I didn't think that there is enough information here to answer all that.

This dividend = $2

next one = $2*1.06=$2.12

next one = $2.12*1.06 = $2.2472

next one = $2.2472*1.06 = $2.382032

This is assuming that the dividends are yearly.  In reality they are usually 6 monthly.

I don't think you have given enough information for me to answer the rest.   

Melody Jul 15, 2014

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