Question

The Ramirez Company's last dividend was $1.75 paid yesterday. Its dividend growth rate is expected to be constant at 6% forever. Its current stock
price is $30.92. What is the best estimate of its expected dividend yield?
O 8.00%
O 7.00%
Ο Ο Ο Ο
O 5.00%
O 6.00%

Answer 1

Answer:

6%

Explanation:

The computation of the estimated dividend yield is shown below:

Dividend yield is

= Current year dividend ÷ Current stock price

= ($1.75 × 1.06) ÷ ($30.92)

= 6%

Hence, the estimation of its expected dividend yield is 6%

We simply applied the above formula so that the correct value could come

And, the same is to be considered