Find out the expected capital gain yield


Problem:

Carlson Products Inc., a constant growth company has a current stock price of $25. Carlson' next annual dividend per share is forecasted to be $2.00. Carlson has a beta coefficient of 0.6, the risk-free rate is 6 percent, and the expected market risk premium is 9 percent.

Required:

Question: If you buy the stock for its current market price, what is your expected capital gain yield?

Note: Provide support for your underlying principle.

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Accounting Basics: Find out the expected capital gain yield
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