At the beginning of the fiscal year, Tel-Pal, Inc., stock se…
At the beginning of the fiscal year, Tel-Pal, Inc., stock sells for $75 per share. There are 2,000,000 shares outstanding. An analyst predicts that the annual dividend to be paid in one year will be $3 per share. The expected inflation rate is 3.5%. The firm plans to issue 40,000 new shares over the year. The price-to-earnings ratio is expected to stay the same, and nominal earnings will increase by 6.8%. Based upon these figures, what is the expected return on a share of Tel-Pal, Inc., stock in the next year?