Merrell enterprises' stock has an expected return of 14%. the stock's dividend is expected to grow at a constant rate of 8%, and it currently sells for $50 a share. which of the following statements is correct? a. the stock's dividend yield is 8%.b. the current dividend per share is $4.00.c. the stock price is expected to be $54 a share one year from now. d. the stock price is expected to be $57 a share one year from now. e. the stock's dividend yield is 7%

The answer is option c). The stock price is expected to be $54 a share one year from now

a). The annual dividend payment=$3 per share

b). Dividend yield==6%

c). The expected stock price is $57 after 1 year

Explanation:

a). Calculate the expected dividend payment

Using the expression for calculating the required rate of return, we can calculate the expected dividend payment as follows:

RRR=(EDP/SP)+DGW

where;

RRR=required rate of return

EDP=expected dividend payment

SP=share price

DGW=dividend growth rate

In our case:

RRR=14%=14/100=0.14

EDP=unknown=d

SP=$50 a share

DGW=8%=8/100=0.08

replacing in the original expression;

0.14=(d/50)+0.08

0.14-0.08=(d/50)

d/50=0.06

d=0.06×50

d=3

The annual dividend payment=$3 per share

b). Calculate the dividend yield

The dividend yield is expressed using the formula below;

Dividend yield=Annual dividend/share price

where;

Annual dividend=$3

share price=$50 a share

replacing;

Dividend yield=3/50=0.06=6%

c). Future price of stock after one year

Future price=Current price(1+dividend growth rate)^n

where;

Current price=$50

dividend growth rate=8%=8/100=0.08

n=1 year

replacing;

Future price=50×(1+0.08)^1=54

Future price=$54

The expected stock price is $54 after 1 year

odd consecutive integers are odd integers that follow each other. they have a difference of 2 between every two numbers. if n is an odd integer, then n, n+2, n+4 and n+6 will be odd consecutive integers. the first number in the pattern is always the variable on its own or in this case, "n". examples.

mauve company permits employees to occasionally use the copying machine for personal purposes