Question

QUESTION 10 The required return on SaddleBrook stock is 138 percent and the dividend growth rate is 3 64 percent. The stock is currently selling for $32 80 a share What is the dividend yield? 10.16 percent 8.93 percent 11.75 percent 10.50 percent 13.36 percent QUESTION 11 The Patty's Paint paid an annual dividend of 164 per share last year and just announced that future dividends will increase by 13 percentually What is the amount of the expected dividend in Year 4? 5143 5168 O 51.46 51.73 5170 the QUESTION 12 Twix Toys stock currently sells for $54. 10 per share and has a fixed 25 percent dividend growth rate. What was the amount of the last dividend paid required rate of return is 11 percent? S449 5357 $530 $4.15 54.36

Answer 1

Question 10

Dividend Yield is calculated below:

Dividend Yield = Annual Dividend Per Share/Current Stock Price*100

Required Rate of Return =( Annual Dividend Per Share/Current Stock Price) + Dividend Growth Rate

13.8% =  ( Annual Dividend Per Share /$32.80) + 3.64%

( Annual Dividend Per Share /$32.80) =   13.8% - 3.64%

Annual Dividend Per Share /$32.80 = 10.16%

Annual Dividend Per Share = $32.80 * 10.16%

Annual Dividend Per Share = $3.33248

Dividend Yield = Annual Dividend Per Share/Current Stock Price*100

= $3.33248/$32.80*100

= 10.16%

So correct Answer is option(1) or 10.16%

Question 11

Expected Dividend Payment = Dividend per share + (Dividend per share* Dividend Growth Rate)

1) First Year dividend = $1.64 +( $1.64* 1.30%)

= $1.64 + 0.02132 = $1.66132

2) Second Year dividend = $1.66132 +( $1.66132* 1.30%)

= $1.66132 + 0.02160 = $1.68292

3) Third Year dividend = $1.68292 +( $1.68292* 1.30%)

= $1.68292 + 0.02188 = $1.70479

4) Third Year dividend = $1.70479+( $1.70479* 1.30%)

= $1.70479+ 0.02216

=$1.73

So correct answer is option (4) or $1.73

Question 12

Required Rate of Return =( Annual Dividend payment/Current Stock Price) + Dividend Growth Rate

11% =  ( Annual Dividend Payment /$54.10) + 2.5%

( Annual Dividend payment /$54.10) =   11% - 2.5%

Annual Dividend Payment /$54.10 = 8.5%

Annual Dividend payment = $54.10 * 8.5%

Annual Dividend payment = $4.60

So correct answer is $4.60