You buy a share of ABC Corporation stock for Rs. 21.40

by | Mar 18, 2020 | Uncategorized

  

Question

You buy a share of ABC Corporation stock for Rs. 21.40.You expect it to pay dividends of Rs. 1.07, Rs.1.1449 and Rs. 1.2250 in Years 1, and 3, respectively, and you expect to sell it at a price of Rs. 26.22 at the end of 3 years.

Calculate the growth rate in dividends.

Calculate the expected dividend yield.

Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is this stock’s expected total rate of return?

  

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