1. The annual dividends of Company ABC are growing at the rate of 4% per...
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1. The annual dividends of Company ABC are growing at the rate of 4% per year. The company is expected to pay $1/share dividend next year. The stock is currently traded at $15/share. Find out the required rate of return of the company's stock.
2. Company A is planning on increasing its annual dividend by 15% a year for the next 4 years and then decreasing the growth rate to 3.5% per year afterwards. The company just paid its annual dividend in the amount of $0.2 per share. Suppose the required rate of return is 15.5%. What is the dividend yield and capital gains yield today?
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