Problem 7-15 Return on Common Stock

You buy a share of The Ludwig Corporation stock for $19.30. You expect it to pay dividends of $1.01, $1.13, and $1.2643 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.39 at the end of 3 years.

1. Calculate the growth rate in dividends. Round your answer to two decimal places. %
2. Calculate the expected dividend yield. Round your answer to two decimal places. %
3. Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return (assume market is in equilibrium with the required rate of return equal to the expected return)? Do not round intermediate calculations. Round your answer to two decimal places. %

Problem 7-1 Return on Common Stock You buy a share of The Ludwig Corporation stock for19.30. You expect it to pay dividends or $1.01, $1.13, and $1.2643 in Years 1, 2, and 3, respectively, and you expect to sell t at a price of $28.39 at the end of 3 years. a. Calculate the groth rate in dividends. Round your answer ba two decimal places b. Calculate the expected dividend yleld. Round your answer to two decimal places c. Assurning that the calculated growth rate is expected to cantinue, you can add the dividend yield ta the expected growth rate to obtain the expected total rate af return. What is this stock's expected total rate of return (assurme market is in qui librium with the required rate of return equal to the expected return)? Do not round intermediate calculations, Round your answer to two dedmal places