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P0 = 21.40
D1 = 1.07
D2 =1.1449
D3 = 1.2250
P3 = 26.22
Growth rate in dividends: PV= 1.07; FV = 1.2240; N = 2; CPT I/Y; I/Y = 6.9544% Let's round
to 7%.
Dividend yield = (d1/P0) = 1.07/21.40 = 0.05
Total return = 7% + 5% = 12%
Solution
P0 = 21.40
D1 = 1.07
D2 =1.1449
D3 = 1.2250
P3 = 26.22
Growth rate in dividends: PV= 1.07; FV = 1.2240; N = 2; CPT I/Y; I/Y = 6.9544% Let's round
to 7%.
Dividend yield = (d1/P0) = 1.07/21.40 = 0.05
Total return = 7% + 5% = 12%

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