The expected rate of return on the common stock of NW Corp. is 14 percent. The stock's dividend is expected to grow at a constant rate of 8 percent a year. The stock currently sells for $50 a share. Which of the following statement is most correct?
f. the stocks dividend yield is 8%
g. the stocks dividend yield is 7%
h. the current dividend per share is $4.00
i. the stock price is expected to be $54 a share in one year
j. the stock price is expected to be $57 a share in one year
Please explain answers in detail.© BrainMass Inc. brainmass.com June 3, 2020, 7:30 pm ad1c9bdddf
R = 14%
g = 8%
P = $50
By DDM method, we can write:
P = ...
This solution contains calculations to aid you in understanding the solution to stock's dividend and expected rate of return.