Question

A firm's stock has a required return of 10.00%. The stock's dividend yield (using the dividend to be paid in one year from today) is 5.50%. What is the amount of the dividend just received if the current stock price is $36 and the dividends grow annually at a constant rate?

Answer 1

Dividend next year =	1.98
36*5.5%
Now we can compute the growth rate using DDM
Growth rate =	required rate - Dividend next year/Price today
		10%-1.98/36
		4.50%
Amount of dividend just received =	$     1.89
1.98/(1+4.5%)
answer =				$     1.89