Question

1. Assume that WMT's stock price 30. It is expected to pay S3 dividend to its investors Assume that its dividend growth rate is 5% Calculate its returns to investors A. 15% B. 15.5% C. 16% D. 1796 Assume that WMT's stock price 30. It is expected to pay $3 dividend to its investors Assume that its dividend growth rate is 5%. Calculate its dividend yield A. 4% B. 5% C. 6% D. 7% & $3 Dividend 3. Assume that WMT's stock return 10%. It just po d end to its investors. Assume that its dividend growth rate is 5% Calculate its stock price A. 57 B. 60 C. 63 D. 66 $1 4. Assume that WMT's stock return -10%. It just paid dividend to its investors. Assume that its dividend growth rate is 5%. Calculate dividend yield (hint: Dividend yield DI/Price) A. 4% B5% C. 6% 5. Assume that WMT's stock return = 10%. It just paid $3 dividend to its investors. Assume that its dividend growth rate is 5%. Calculate the expected dividend two years from now (D2) A. 3.0 B. 3.1 C. 3.2 D. 3.3

Answer 1

Ans 1) a 15%

Stock Price = $30

Dividend to be Paid = $3

Growth rate = 5%

Stock Price = Dividend to be Paid / (Return on Equity - Dividend Growth Rate )

(Return on Equity - Dividend Growth Rate ) = Dividend to be Paid / Stock Price

Return on Equity = (Dividend to be Paid / Stock Price ) + Dividend Growth Rate

= (3 / 30) + 0.05 = 0.1 + 0.05 = 0.15 = 15%

Return on Equity = 15%

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