Shares of Bleckwell Remodelers common stock are currently selling for $42.50 a share. The last annual...
Shares of Bleckwell Remodelers common stock are currently selling for $42.50 a share. The last annual dividend paid was $2.50 per share. The market rate of return is 15%. At what rate is the dividend growing?
Homework Answers
market rate of return=(D1/Current price)+Growth rate
0.15=(2.5*(1+Growth rate)/42.5)+Growth rate
0.15=(2.5+2.5*Growth rate)/42.5+Growth rate
0.15=0.0588235294+0.0588235294*Growth rate+Growth rate
Growth rate=(0.15-0.0588235294)/(0.0588235294+1)
=8.61%(Approx).
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