1650121375 8 The current dividend yield on Claytons Metals common stock is 32

1650121375 8 the current dividend yield on claytons

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1.65/0.12=\$13.75 8. The current dividend yield on Clayton's Metals common stock is 3.2 percent. The company just paid a \$1.48 annual dividend and announced plans to pay \$1.54 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock? (1.54- 1.48)/1.48= .04054 0.032+.04054=7.25% 9. National Warehousing just announced it is increasing its annual dividend to \$1.18 next year and establishing a policy whereby the dividend will increase by 3.25 percent annually thereafter. How much will one share of this stock be worth 8 years from now if the required rate of return is 9.5 percent? D1=1.18 g=0.0325 r=0.095 p0=1.18/(0.095-0.0325)=18.88 p8=18.88*(1+0.0325)^8=\$24.38 10. KL Airlines paid an annual dividend of \$1.18 a share last month. The company is planning on paying \$1.50, \$1.75, and \$1.80 a share over the next 3 years,

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respectively. After that, the dividend will be constant at \$1.50 per share per year. What is the market price of this stock if the market rate of return is 10.5 percent? P3=1.5/0.105=\$14.29 P0=1.5/(1+0.105)^1+1.75/(1+1.05)^2+(1.8+14.29)/(1+0.105)^3=14.72 11. It will cost \$6,000 to acquire an ice cream cart. Cart sales are expected to be \$3,600 a year for three years. After the three years, the cart is expected to be worthless as the expected life of the refrigeration unit is only three years. What is the payback period?
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