Question

For the past five years, the price of Turtles, Inc., stock has been increasing at a...

For the past five years, the price of Turtles, Inc., stock has been increasing at a rate of 5 percent a year. Currently, the stock is priced at $42 a share and has a required return of 12 percent. What is the dividend yield? ANSWER IS: 7.00 PERCENT PLEASE SHOW WORK WITHOUT EXCEL

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Answer #1

Solution:-

First we need to Calculate Dividend per share-

Current Price =

DPS = Current Price * (Required Return - Growth Rate)

DPS = $42 * (0.12 - 0.05)

DPS = $42 * 0.07

DPS = $2.94

To Calculate Dividend Yield-

Dividend Yield =

Dividend Yield =

Dividend Yield = 7%

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