If D₀ = $1.75,g (which is constant)= 3.6%,and P₀ = $34.00,then what is the stock's expected total return for the coming year?

Question

Quizplus · Accepted Answer

The total return equation is: Total Return = Dividend Yield + Capital Appreciation Dividend Yield = D₀ / P₀ = 1.75 / 34.00 = 5.15% Capital Appreciation = g = 3.6% Total Return = 5.15% + 3.6% = 8.75% Therefore, the stock's expected total return for the coming year is 8.75%, which is closest to option B) 8.93%.

If D0 = $1

If D₀ = $1