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2 years ago

If D0 = $2.25, g (which is constant) = 3.5%, and P0 = $54, then what is the stock's expected dividend yield for the coming year?

Business

1 answer:

makvit [3.9K]2 years ago

3 0

Answer:

4.31%

Explanation:

The computation of the expected dividend yield is shown below:

As we know that

Dividend yield = (Annual dividend ÷ Market price) × 100

where,

Annual dividend would be

= $2.25 + $2.25 × 3.5%

= $2.25 + 0.07875

= $2.32875 per share

And, the market price is $54 per share

So, the expected dividend yield is

= ($2.32875 per share ÷ $54 per share) × 100

= 4.31%

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