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Best Market is planning on paying annual dividends of $1.20, $1.35, and $1.50 over the next 3 years, respectively. After that, Best plans to pay a constant dividend of $1.75 per share each year. To compute the value of Best's stock today, you should first determine the value of the stock at the end of year _____. Select one: a. 2 b. 4 c. 1 d. 0 e. 3 Please answer asap. if possible, please provide steps
Solution:
500 Shares bought at the price of 41.80.
Total investment =500 * 41.80 = 20900
Total Proceeds from selling = 7280 and dividend = 820
Capital Gain Yield = (Capital gain / Total Investment) * 100 = (7280 / 20900) * 100 = .3483 *100 = 34.83%
Option d is the correct answer
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