Credenza Industries is expected to pay a dividend of $1.80 at the end of the coming...

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Question

Credenza Industries is expected to pay a dividend of $1.80 at the end of the coming year. It is expected to sell for $66 at t

Answer 1

Answer #1

Current price=Future dividend and value*Present value of discounting factor(rate%,time period)

=1.8/1.08+66/1.08

=62.78(Approx).

Hence capital gains yield=(End value-Beginning value)

=(66-62.78)

=$3.22(Approx).

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Answer 2

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