Question

A common stock is selling for $60 and paid a $3 dividend last year. Its value is expected to increase each year at 6.3% growt

SHOW STEP BY STEP WORK ANSWER IS 11.62%

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Answer #1

Expected rate of return=(D1/Current price)+Growth rate

=[(3*1.063)/60]+0.063

which is equal to

=11.62%(Approx).

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