Kreil Industries has a share price of $22.94 today. If Krell is expected to pay a...

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Answer 1

Answer #1

Let current price of share be P0 = $ 22.94

Also expected price of share be P1 = $ 24

Dividend = $ 0.73

Thus Dividend yield = Dividend / Current price of share = 0.73/22.94 = 0.0318 = 3.18%

Capital gain = (P1- P0) / P1 = (24-22.94)/ 22.94 = 0.0462 = 4.62%

Equity cost of capital = Dividend Yield + capital gain rate = 3.18 + 4.62 = 7.80%

Thus Total return = 7.80%

Answer 2

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