Suppose you know that a company’s stock currently sells for…

Suppose you know that a company’s stock currently sells for $76 per share and the required return on the stock is 11.5 percent. You also know that the total return on the stock is evenly divided between capital gains yield and 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?

This morning, you purchased a stock that will pay an annual…

This morning, you purchased a stock that will pay an annual dividend of $2.20 per share next year. You require a 15 percent rate of return and the dividend increases at 3.5 percent annually. What will your capital gain be in dollars on this stock if you sell it three years from now?