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Suppose you know that a company’s stock currently sells for $67 per share and the required return on the stock is 12 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

Respuesta :

Answer:

the dividend per share is $3.79

Explanation:

Expected return = Dividend yield + Capital gain yield

The total return is evenly divided into the capital gain yield and dividend yield. Hence, the capital gain yield is 6% and dividend yield is 6%.

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