Microsoft Word - FIN 424-Project-DRAFT.docx

The expected dividend next year is the same as this year’s dividend, $7. Thus the dividend growth rate is zero and the price today is: P0 = D1/r = 7/.12 = $58.33. The expected dividend in two years is this year’s dividend, $7. P1= D2/r = 7/.12 = $58.33 Dividend yield = $7/$58.33 = .12 =12% Expected capital gains = 0 Expected rate of return ... ................
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