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8 October, 01:25

JL Co. stock currently sells for $64 per share and the required return is 12 percent. The total return is evenly divided between the capital gains yield and the dividend yield. What is the current dividend per share if it's the company's policy to always maintain a constant growth rate in its dividends?

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  1. 8 October, 02:30
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    The answer is $3.62

    Explanation:

    Dividend yield = 0.12/2

    Dividend yield = 0.06

    D1 = 0.06 ($64)

    D1 = $3.84

    D0 = $3.84/1.06

    D0 = $3.62
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