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    Yields and Returns

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    1. (Excel) Stock Values: Johnson Catering Corporation will pay a $2.65 per share dividend next year. The company pledges to increase its dividend by 4.75 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company's stock today?

    2. Calculating Returns: Suppose a stock had an initial price of $75 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $86.
    a. Compute the percentage total return.
    b. Compute the dividend yield.
    c. Compute the capital gains yield

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    Solution Preview

    1. (Excel) Stock Values: Johnson Catering Corporation will pay a $2.65 per share dividend next year. The company pledges to increase its dividend by 4.75 percent per year, indefinitely. If you require a return of 11 ...

    Solution Summary

    Solution helps in evaluating percentage total return.

    $2.49

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