Calculate the growth rate in dividends

Assignment Help Accounting Basics
Reference no: EM132727784

Problem - You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years.

a. Calculate the growth rate in dividends.

b. Calculate the expected dividend yield.

c. Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return? (Assume the market is in equilibrium with the required return equal to the expected return.)

Reference no: EM132727784

Questions Cloud

Describe briefly the legal rights of common stockholders : B&M's weighted average cost of capital (WACC) is 11%. Describe briefly the legal rights and privileges of common stockholders
Explain what the difference on acquisition is : Explain what the difference on acquisition is? Elsa Limited acquired the identifiable assets and liabilities of Anna Limited for $265 000.
Give suggest negotiation techniques : Give suggest negotiation techniques you might use to improve the results at the bargaining table.
Summarize the result of outsourcing production of containers : Summarize the result of outsourcing production of the containers. If production is outsourced, all variable production costs and 70 percent of fixed production
Calculate the growth rate in dividends : You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, Calculate the growth rate in dividends
Improve intra-organizational communications : 1. What communication barriers prevent interpersonal communication?
What does social responsibility mean to you personally : 1. What does social responsibility mean to you personally?
Find what acer company should report interest revenue : Acer Company uses the effective-interest, For the year ended December 31, 2016, Acer Company should report interest revenue from the Samsung bonds of
Financial performance of organizations : Do you think social responsibility has a positive impact on the financial performance of organizations

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd