Use the Following Information to Answer the Question(s)below

question 48

Multiple Choice

Use the following information to answer the question(s) below.
Rearden Metals has a current stock price of $30 share,is expected to pay a dividend of $1.20 in one year,and its expected price right after paying that dividend is $33.
-Rearden's expected capital gains yield is closest to:

• A)4.0%.
• B)6.4%.
• C)8.2%.
• D)10.0%.

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Definitions:

Estimated Useful Life

The expected time period during which an asset is likely to be functional and economically useful.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, representing the discount rate that makes the net present value of all cash flows equal to zero.

Net Present Value

The variance between the current value of cash coming in and the current value of cash going out over a time span.

Discount Rate

The interest rate used in determining the present value of future cash flows or in evaluating the attractiveness of an investment.