Question

The next dividend payment by Grenier, Inc will be $2.04 per share. The dividends are anticipated to maintain a growth rate of 7 percent forever. If the stock currently sells for $41.00 per share, what is the dividend yield? What is the expected capital gains yield?

The next dividend payment by Grenier, Inc., will be $2.16 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $44 per share, what is the required return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) Required return %

Answer 1

rate positively ..

Ans 1)	Required rate of return =
		Expected dividend next year/price today + Growth rate
		2.16*44+5%
		9.91%
	Ans =	9.91%
Ans 2)	Dividend yield = Expected dividend next year/Price today
		2.04/41
		4.98%
	Capital gain yield= Required rate - Dividend yield
		First we have to compute the required rate
		required rate=	2.04/41+7%
			11.98%
	capital gain yield	7.00%
	11.98%-4.98%

Answer 2

Just be sure for part one to divide. While the math is shown with the numbers there is an *. the math is correct but the sign used was incorrect