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7nadin3 [17]
3 years ago
5

Suppose you know a company's stock currently sells for $80 per share and the required return on the stock is 14 percent. You als

o know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
Business
1 answer:
nataly862011 [7]3 years ago
8 0

Answer:

The current dividend is $5.23 per share

Explanation:

This return is divided equally between dividend yield and capital gains yield, in other words 7%each (14%/2)

Expected return=current dividend*(1+growth rate)/share price +growth rate

note the growth rate also represents capital gains yield

0.14=CD*(1+0.07)/80+0.07

0.14-0.07=CD*(1.07)/80

0.07*80=CD*1.07

5.6=CD*1.07

CD=5.6/1.07

CD=$5.23

Ultimately the current dividend is $5,23 per share a shown by solving the equation for current dividend above

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The employees are part of the social environment, so cutting their wages and benefits does not make the company socially responsible.

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Usually, when harm or potential misunderstanding includes someone you know or work with, the first step is to try to settle things without court. Legal costs can become overwhelming, especially if the problem could be solved beforehand.

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