if the current price of common stock is $55 per share in current dividends that was...
if the current price of common stock is $55 per share in current dividends that was just paid was $2.20 per share, what is the required rate of return on the stock if the growth rate and dividend is expected to be 7% per year?
Homework Answers
Current price = D0(1+g)/(rs-g)
55 = 2.20 (1+ .07)/(rs-.07)
55 = 2.20 * 1.07 /(rs-.07)
(rs- .07) = 2.20 *1.07 /55
(rs- .07) = 2.354/55
(rs- .07) = .0428
rs =.0428 +.07
= .1128 or 11.28%
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