Now suppose that Temp Forces earnings and dividends are expected to decline by a constant 6% per
Question:
Now suppose that Temp Force’s earnings and dividends are expected to decline by a constant 6% per year forever—that is, g = −6%. Why would anyone be willing to buy such a stock, and at what price should it sell? What would be the dividend yield and capital gains yield in each year?
Step by Step Answer:
Anyone would be willing to buy such a stock if they believe that the com...View the full answer
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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The dividend yield or dividend–price ratio of a share is the dividend per share, divided by the price per share. It is also a company\\\'s total annual dividend payments divided by its market capitalization, assuming the number of shares is constant. It is often expressed as a percentage.
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