Question: The next dividend payment by Hoffman, Inc., will be $2.90 per share. The dividends are anticipated to maintain a growth rate of 7.75 percentforever. Assume

  1. The next dividend payment by Hoffman, Inc., will be $2.90 per share. The dividends are anticipated to maintain a growth rate of 7.75 percentforever. Assume the stock currently sells for $49.40 per share.What is the dividend yield? What is the expected capital gains yield?
  2. Consider the following cash flows:YearCash Flow 0: $28,5001: 15,2002: 13,7003: 10,100a.What is the profitability index for the cash flows if the relevant discount rate is 10 percent?What is the profitability index if the discount rate is 15 percent?What is the profitability index if the discount rate is 22 percent?

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