Assume that a company’s stock currently sells for $40 per share and the required (and expected) return on the stock is 10%. Also assume that this return is evenly split between capital gains yield and dividend yield. If the company expects a constant growth rate, what is the next expected annual dividend per share?
A firm's stock is currently selling for $20 per share and the next dividend is expected to be $1 per share. Assume that the required rate of return on this stock is 10%. What perpetual growth rate is expected on this stock?