Question

Assume that Bon Temps’ stock is currently selling at $21.20. What is the expected rate of return on the stock?

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Year 0 Dividend 2 Year 1 .12 2 Year 2 2.2472 Year 3 2.382 1) 2) Current Stock price = Dividend at year 1/ (Cost of Capital -

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Answer #1

We see as calculated in the question itself, expected rate of return=total return=16.00%

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