If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is...

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If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is...

If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock’s expected total return for the coming year?

1.

8.37%

2.

8.59%

3.

8.81%

4.

9.03%

5.

9.27%

business finance

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Answer 1

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Answer #1

Correct answer is option 5.9.27%

Calculation of Expected total return for the coming year [k]

we know that,

P0 = D1 / K-g

32=1.75*1.036 / k - 3.6

So k = 1.813 / 32 + 3.6%

=9.27%

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Answer 2

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