calculate #3 return on investment

ART I: STOCK VALUATION
	Dividend from Financial Statements:
Read the Explanations to the right of the calculation cells for specific information on the data.
	Year	Cash Div/share ($)	Dividend Yield	Stockholder's Equity (in millions)	Stock Price
	2015	2.92	3.00%	2,491	97.33333333
	2016	3.12	2.70%	429	115.5555556
	2017	3.32	2.60%	1,030	127.6923077

1. Stock Valuation - The new dividend yield if the company increased its dividend per share by 1.75

	Year	Cash Div/Share ($) +1.75	Dividend Yield	Stockholder's Equity (in millions)	Stock Price
	2015	4.67	4.80%	2,491	97.33333333
	2016	4.87	4.21%	429	115.5555556
	2017	5.07	3.97%	1,030	127.6923077

2. The dividend yield if the firm doubled it's outstanding shares

	Year	Cash Div/Share ($)	Dividend Yield	Stockholder's Equity (in millions) -doubled	Stock Price
	2015	1.46	1.50%	4,982	97.33333333
	2016	1.56	1.35%	858	115.5555556
	2017	1.66	1.30%	2,060	127.6923077


3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above

	Year	Cash Div/Share ($) +1.75	Stock Price	Return on Investment
	2015	4.67	97.33333333		CALCULATE ROI
	2016	4.87	115.5555556		(Dividends + Capital gain)/ Divided by the original Price
	2017	5.07	127.6923077		(D1 + (P1-P0)) / PO

Expert Solution

Return on equity

2015	4.80%	4.67*100/97.33333333
2016	23.72%	4.87+(115.5555556-97.33333333)/97.33333333
2017	36.40%	5.07+(127.6923077-97.33333333)/97.33333333

The Return on equity for the three consecutive years is as 2015- 4.8% , 2016 -23.72% & 2017 -36.40%

ROE 0 Net Income / Shareholders equity

Prathyusha answered 2 years ago

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