Question 12 1 pts Yum! Brands just paid an annual dividend of $2.20 a share and...

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Question 12 1 pts Yum! Brands just paid an annual dividend of $2.20 a share and is expected to increase that amount by 2.2 pe Question 14 1 pts One year ago, Norbert Wagner purchased 30 shares of DUX Inc., stock for $20 per share. During the last year

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Answer 1

Answer #1

Part A:

Price = D0 (1+g) / [ Ke - g ]

= $ 2.2 ( 1 + 0.022) / [ 14% - 2.2% ]

= 2.2 ( 1.022) / 11.8%

= $ 2.2484 / 11.8%

= $ 19.05

Part B:

Ret = [ P1 - P0 + DIv ] / P0

= [ $ 19 - $ 20 + $ 0.5 ] / $ 20

= $ -0.5 / $ 20

= - 0.025 i.e -2.5%

option C is correct.

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Answer 2

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