Determining the expected price per share

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1. Explain the rights that common shareholders have. Which of these rights is (or are) most important in determining the value of a share of stock in a company, and why?

2. The McKenzee Corp. has not paid a dividend in the past, but it is expected to start paying dividends about three years from today. The dividend will start at $0.50 per share and increase at the rate of 50% for three years, then 25% for two more years, and will grow at 5% per year after that for the foreseeable future.   McKenzee has a beta of 0.90, the risk-free rate is 4% and the market risk premium is 6%.  Calculate the expected price per share (today) for McKenzee Stock. If you purchase the stock at the price you have calculated, and what will be the dividend yield and capital gains yield in the first year?

Reference no: EM131533998

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