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What is the required rate of return on the stock

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Reference no: EM133119073

For each question, please show your work to reach the answers rather than just report the answers.

Please answer (type your calculation work) on the space provided for each question.

1. A zero growth common stock pays the annual dividend of $ 1.75 per share at the end of each year. If the required rate of return on the common stock is 11.2 %, what is the price per share of the common stock today?

2. Thames Inc.'s most recent dividend was $2.6 per share (D0 = $2.6). The dividend is expected to grow at a rate of 5% per year. The risk-free rate is 4% and the return on the market is 10%. The company's beta is 1.5

A. What is the required rate of return on the stock, ks?

B. What is the price of the stock today, P0?

C. What is the price of the stock three years from now, P3?

3. Conner Corporation has a stock price of $50 per share. The just paid dividend was $ 3.5 per share (D0 = $3.5). The long-run growth rate for the company is 8%.

A. What is the company's dividend yield?

B. What is the company's capital gains yield?

Reference no: EM133119073

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