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19 August, 22:32

Krell Industries has a share price of $ 21.05 today. If Krell is expected to pay a dividend of $ 0.89 this year and its stock price is expected to grow to $ 24.36 at the end of the year, what is Krell's dividend yield and equity cost of capital?

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  1. 20 August, 01:16
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    Krell's dividend yield and equity cost of capital are 4.23% and 19.95%

    Explanation:

    Dividend yield = expected dividend/price today

    = $ 0.89/$ 21.05

    = 4.23%

    Equity cost of capital = (Ending share price - Initial price + Dividend per share) / Initial price * 100

    = [ ($24.36 - $21.05 + 0.89) / $21.05]*100

    = 19.95%

    Therefore, Krell's dividend yield and equity cost of capital are 4.23% and 19.95%
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