Consider the case of Portman Industries:
Portman Industries just paid a dividend of $1.68 per share. The company expects the coming year to be very profitable, and its dividend is expected
to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year.
(Note: Do not round your intermediate calculations.)
Term Value
Dividends one year from now (D1) $2.0160 (Note: Rounded to four decimal places)
Horizon value (Note: Rounded to two decimal places)
Intrinsic value of Portman's stock $20.97 (Note: Rounded to two decimal places)
The risk-free rate (rRF) is 5.00%, the ma premium (RPM) is 6.00%, and Portman's beta is 1.50.
Assuming that the market is in equilibriu e information just given to complete the table.
What is the expected dividend yield for Portman's stock today?
10.00%
8.00%
10.96%
9.61%