Problem 7.06 – Total Return is Evenly Divided, Dividend per Share Calculation

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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Given a stock price and required return, what is the current dividend per share if the total return is evenly divided between capital gains yield and dividend yield, and the company maintains a constant growth rate in its dividends? You know that the total return for a stock is evenly divided between the capital gains yield and dividend yield. Determine the dividend per share.

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