A firm which named Beyonce is currently growing fast. Current risk free rate is 7%; however, since the firm is somewhat risky investors requires a risk premium. So the required rate of return for the firm is 20%. Its dividends are expected to grow at a 26% rate for the next two years and then fall to a constant 6% growth rate thereafter. The company just paid a dividend of $1.75. What is the dividend yield of the firm at the end of the first year?

Answer rating: 100% (QA)

To calculate the dividend yield of the firm at the end of the first year we need to calculate the ex... View the full answer