Explore BrainMass

Dividends & NPV of Stock

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Martin's Yachts has paid annual dividends of $1.40, $1.75, and $2.00 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has leveled off and sales are expected to remain relatively constant. Given the lack of future growth, you will only buy this stock if you can earn at least a 15% rate of return. What is the maximum amount you are willing to pay to buy one share today?
A. $10.00
B. $13.33
C. $16.67
D. $18.88
E. $20.00

Martha's Vineyard recently paid a $3.60 annual dividend on its common stock. This dividend increases at an average rate of 3.5% per year. The stock is currently selling for $62.10 a share. What is the market rate of return?
A. 2.5%
B. 3.5%
C. 5.5%
D. 6.0%
E. 9.5%

© BrainMass Inc. brainmass.com March 21, 2019, 5:54 pm ad1c9bdddf

Solution Summary

The expert examines the required rate of return for Martin's Yachts. The maximum amount of shares for payments are determined.