Please see the attached file for details.
Problem 12-11 --> Common Stock, Valuation Per Share
China S. Construction, Inc. is in the business of building electrical power plants in the eastern United States. Jack Godell and the rest of the board members of the firm have just announced a $4 per share dividend on the corporation's common stock to be paid in one year. Because the quality of some of its recent projects is under attack by investigative television reporters, the expected constant dividend growth rate is only estimated to be 1 percent. The required rate of return for similar stocks in this industry is 16 percent.
Problem 12-12 --> Yield on Common Stock
The current listed price per share of a certain common stock is $15. The cash dividend expected from this corporation in one year is $2 per share. All market research indicates that the expected constant growth rate in dividends will be 4 percent per year in future years. What is the rate of return on this investment that an investor can expect if share are purchased at the current listed price.
The solution examines China S Construction PV of dividend and yield.