Question

​(Common stockholder expected return​) Ziercher executives anticipate a growth rate of 11 11 percent for the​...

​(Common stockholder expected return​) Ziercher executives anticipate a growth rate of 11 11 percent for the​ company's common stock. The stock is currently selling for ​$ 38.95 38.95 per share and pays an​ end-of-year dividend of ​$ 2.19 2.19. What is your expected rate of return if you purchase the stock for its current market price of ​$ 38.95 38.95​?

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Answer #1

Expected return =Dividend/Current price+growth

Expected return =2.19/38.95+11%

Expected return =16.62%

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