Calculate the companys capital gains yield

Reference no: EM133326445

Case: ABT is expected to pay a dividend of $8.15 one year from now. Compute the expected value of ABT's stock as of today, as well as the dividend yield, which is computed as the expected dividend per share divided by the stock price today. Assume the annual dividend will grow 5% in perpetuity and the market requires a 15% expected return.

Next, calculate the company's capital gains yield, which is computed as the expected gain per share (change in price) divided by the stock price you calculated.

Reference no: EM133326445

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