Question

The market price of a stock is $22.43 and it just paid a dividend of $1.86. The required rate of return is 11.02%. What is the expected growth rate of the dividend? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) unanswered not submitted The market price of a stock is $24.56 and it is expected to pay a dividend of $1.73 next year. The required rate of return is 11.18%. What is the expected growth rate of the dividend? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) unanswered not submitted Deine215 ndano con

Answer 1

#4

$Price = \frac{D_{0}*(1+g)}{r - g}$

$22.43 = \frac{1.86*(1+g)}{0.1102 - g}$

$2.471786 - 22.43*g = 1.86+1.86*g$

$0.611786 = 24.29*g$

$g = 0.02518674352$

g = 2.52%

#5

$Price = \frac{D_{1}}{r - g}$

$g = r - \frac{D_1}{Price}$

$g = 0.1118 - \frac{1.73}{24.56}$

$g = 0.04136026059$

g = 4.14%

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