One-third of the return on stock is derived from dividends

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1. The common stock of Kangaroo Tours is selling for $71.36 a share and has a 13.9 percent rate of return. One-third of the return on this stock is derived from dividends and the other two-thirds is derived from capital gains. What is the amount of the next dividend?

2. Dvorak Enterprises is expected to pay a stable dividend of $7 per share per year for the next 11 years. After that, investors anticipate that the dividends will grow at a constant rate of 2.3 percent per year indefinitely. If the required rate of return on this stock is 11 percent, what is the fair market value of a share of Dvorak?

Reference no: EM132053078

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