1. Stock Valuation
Suppose you know a company's stock currently sells for $80 per share and the required return on the stock is 16 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, the current dividend is $____________ per share.
2. Supernormal Growth
Janicek Corp. is experiencing rapid growth. Dividends are expected to grow at 32 percent per year during the next 3 years, 20 percent over the following year, and then 7 percent per year indefinitely. The required return on this stock is 14 percent, and the stock currently sells for $80 per share. The projected dividend for the coming year is $__________
Suppose you know a company's stock currently sells for $80 per share and the required return on the stock is 16 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, the current dividend is $____________ per share.
2. Supernormal Growth
Janicek Corp. is experiencing rapid growth. Dividends are expected to grow at 32 percent per year during the next 3 years, 20 percent over the following year, and then 7 percent per year indefinitely. The required return on this stock is 14 percent, and the stock currently sells for $80 per share. The projected dividend for the coming year is $__________