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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