Super Computer Companys stock is selling for 100 per share t

Super Computer Company\'s stock is selling for $100 per share today. It is expected that—at the end of one year—it will pay a dividend of $6 per share and then be sold for $114 per share. Calculate the expected rate of return for the shareholders.

Solution

Buying price of share = $100 (today)

Selling price of share after 1 yr = $114

Dividend = $6/share/year

Expected ROR = (Profit/Buying price)*100% = {(114+6-100)/100} *100% = 20%

Super Computer Company\'s stock is selling for $100 per share today. It is expected that—at the end of one year—it will pay a dividend of $6 per share and then

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