Question
Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the...
Kelsey Drums, Inc., is a well-established supplier of fine
percussion instruments to orchestras all over the United States.
The company's class A common stock has paid a dividend of $11 per
share per year for the last 15 years. Management expects to
continue to pay at that amount for the foreseeable future. Sally
Talbot purchased 100 shares of Kelsey class A common 10 years ago
at a time when the required rate of return for the stock was 15%.
She wants to sell her shares today. The current required rate of
return for the stock is 10%. How much total capital gain or loss
will Sally have on her shares?
The value of the stock when Sally purchased it was $ per share?
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