Company Dividend Yield Required Return Price Market Capitalization A 5% 4% $100 $1,000,000 B 4% 5%...

Company	Dividend Yield	Required Return	Price	Market Capitalization
A	5%	4%	$100	$1,000,000
B	4%	5%	$10	$10,000,000

Which company’s stock has a higher dividend per share?
Which stock has the higher growth rate?

Solutions

Expert Solution

First part:

Particulars	A	B
Market cap	1,000,000	10,000,000
/ price	100	10
Shares outstanding	10,000	1,000,000

Price	100	10
× dividend yield	5%	4%
Dividend per share	5.00	0.40

Company A has higher dividend per share.

second part:

Comapny B has higher growth rate as required rate is lesser than dividend yield.

ekkarill92 answered 1 year ago

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