Problem 7-3 Stock Values [LO 1]

The next dividend payment by Wyatt, Inc., will be $3.20 per share. The dividends are anticipated to maintain a growth rate of 6.75 percent, forever. Assume the stock currently sells for $50.00 per share.

Requirement 1:

What is the dividend yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Dividend yield

%

Requirement 2:

What is the expected capital gains yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Capital gains yield

%

Problem 7-7 Stock Valuation [LO 1]

Bui Corp. pays a constant $13.10 dividend on its stock. The company will maintain this dividend for the next nine years and will then cease paying dividends forever.

Required:

If the required return on this stock is 11 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Current share price

$

Problem 7-16 Nonconstant Dividends [LO 1]

Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $11.25 per share and has announced that it will increase the dividend by $9.25 per share for each of the next four years, and then never pay another dividend.

Required:

If you require a return of 13 percent on the company