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Suppose you know that a company's stock currently sells for $57 per share and the required return on the stock is 10.4%. 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?
What is the dividend per share in Year 4?

Sagot :

abiolataiwo2015

Answer:

$2.82

Explanation:

Calculation for what is the current dividend per share

First step is to calculate the Dividend yield

Dividend yield= 1/2 (.104)

Dividend yield= .052

Now let calculate the current dividend per share

Current dividend per share=(.052*57 per share)/(1+0.052)

Current dividend per share= 2.964/1.052

Current dividend per share=$2.82

Therefore the Current dividend per share will be $2.82

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