(Please use a math, finance equation and/ or formula. DONT USE A SHEET CHART, EXCEL, OR GRAPH) 13) ACME Corporation is e
Posted: Sat Mar 19, 2022 5:55 pm
(Please use a math, finance equation and/ or formula.
DONT USE A SHEET CHART, EXCEL, OR GRAPH)
13) ACME Corporation is expanding rapidly and currently needs to
retain all of its earnings; hence, it does not pay dividends.
However, investors expect ACME to begin paying dividends, beginning
with a dividend of $2.50 coming 3 years from today. The dividend
will grow rapidly – at a rate of 25% per year – during Years 4 and
5, but after Year 5, growth be a constant 5% per year. If the
required return on ACME is 12%, what is the capital gains yield for
the first year?
0%
7%
5%
5.5%
12%
DONT USE A SHEET CHART, EXCEL, OR GRAPH)
13) ACME Corporation is expanding rapidly and currently needs to
retain all of its earnings; hence, it does not pay dividends.
However, investors expect ACME to begin paying dividends, beginning
with a dividend of $2.50 coming 3 years from today. The dividend
will grow rapidly – at a rate of 25% per year – during Years 4 and
5, but after Year 5, growth be a constant 5% per year. If the
required return on ACME is 12%, what is the capital gains yield for
the first year?
0%
7%
5%
5.5%
12%