Question

Testbank, Question 50 The stock of Townships Ski Resorts Inc. just paid a dividend of $0.78....

Testbank, Question 50

The stock of Townships Ski Resorts Inc. just paid a dividend of $0.78. What is the expected capital gains yield if the stock is selling for $28.25 today and the required rate of return is 15 percent?

13.62%

12.30%

11.91%

10.73%

0 0
Add a comment Improve this question Transcribed image text
Answer #1

28.25 = 28.25*(0.15-g) = 4.2375-28.25g 4.2375-0.78 3.4575 = 29.03g 0.78*(1+g)/(0.15-g) 0.78+0.78g 0.78+0.78g 0.78g+28.25g 0.7

Add a comment
Know the answer?
Add Answer to:
Testbank, Question 50 The stock of Townships Ski Resorts Inc. just paid a dividend of $0.78....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • A stock just paid a dividend of $2.14. The dividend is expected to grow at 20.29%...

    A stock just paid a dividend of $2.14. The dividend is expected to grow at 20.29% for three years and then grow at 4.33% thereafter. The required return on the stock is 11.91%. What is the value of the stock? The risk-free rate is 1.05% and the market risk premium is 6.41%. A stock with a β of 0.93 just paid a dividend of $2.52. The dividend is expected to grow at 21.12% for three years and then grow at...

  • Just today, Fawlty Foods, Inc.'s common stock paid a $1.40 annual dividend per share and had a closing price of $21

    Just today, Fawlty Foods, Inc.'s common stock paid a $1.40 annual dividend per share and had a closing price of $21. Assume that the market's required return, or capitaliza¬tion rate, for this investment is 12 percent and that dividends are expected to grow at a constant rate forever. a. Calculate the implied growth rate in dividends. b. What is the expected dividend yield7 c. What is the expected capital gains yield7. 

  • Super Carpeting Inc. just paid a dividend ( D0 ) of $2.16, and its dividend is...

    Super Carpeting Inc. just paid a dividend ( D0 ) of $2.16, and its dividend is expected to grow at a constant rate (g) of 3.15% per year. If the required return ( rs ) on Super’s stock is 7.88%, then the intrinsic, or theoretical market, value of Super’s shares is per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase in the...

  • Super Carpeting Inc. just paid a dividend (D0D0) of $2.16, and its dividend is expected to...

    Super Carpeting Inc. just paid a dividend (D0D0) of $2.16, and its dividend is expected to grow at a constant rate (g) of 3.15% per year. If the required return (rsrs) on Super’s stock is 7.88%, then the intrinsic, or theoretical market, value of Super’s shares is   per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase in the required rate of return...

  • Storico Co. just paid a dividend of $3.40 per share. The company will increase its dividend...

    Storico Co. just paid a dividend of $3.40 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. 1) If the required rate of return on Storico’s stock is 13 percent, What should a share of stock sell for today? What...

  • The growth of FSL Inc. is -6% per year. The stock just paid a dividend of...

    The growth of FSL Inc. is -6% per year. The stock just paid a dividend of $3.00 per share. investors require a return of 15% to invest in FSL. a) what is the price of a share of the stock today? b) what is the expected price next year? c) what is your rate of return for a 1 year investment in FSL?

  • Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at...

    Super Carpeting Inc. (SCI) just paid a dividend (D₀) of $3.12 per share, and its annual dividend is expected to grow at a constant rate (g) of 6.50% per year. If the required return (rss) on SCI’s stock is 16.25%, then the intrinsic value of SCI’s shares is      per share. Which of the following statements is true about the constant growth model? When using a constant growth model to analyze a stock, if an increase in the required rate of...

  • 5. Constant growth stocks Super Carpeting Inc. (SCI) just paid a dividend (D) of $1.92 per...

    5. Constant growth stocks Super Carpeting Inc. (SCI) just paid a dividend (D) of $1.92 per share, and its annual dividend is expected to grow at a constant rate (g) of 4.00% per year. If the required return (rs) on SCI's stock is 10.00%, then the intrinsic value of SCI's shares is per share. Which of the following statements is true about the constant growth model? O The constant growth model implies that dividends remain constant from now to a...

  • Suppose a stock had an initial price of $50 per share, paid a dividend of $.80...

    Suppose a stock had an initial price of $50 per share, paid a dividend of $.80 per share during the year, and had an ending share price of $38. Compute the percentage total return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)   Total return % What was the dividend yield and the capital gains yield? (A negative answer should...

  • Stock Valuation Bretton, Inc., just paid a dividend of $3.15 on its stock. The growth rate in dividends is expected to...

    Stock Valuation Bretton, Inc., just paid a dividend of $3.15 on its stock. The growth rate in dividends is expected to be a constant 4 percent per year, indefinitely. Investors require a 15 percent return on the stock for the first three years, a 13 percent return for the next three years, and then an 11 percent return thereafter. What is the current share price for the stock?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT