A stock sells for $ 43.23. The next dividend will be $ 2.10 per share. If...

Question

Question

A stock sells for $ 43.23. The next dividend will be $ 2.10 per share. If the expected return is 15%, what must be the expected growth of the stock?

Please provide a clear explanation, thanks.

Answer 1

Answer #1

expected return=(D1/Current price)+Growth rate

0.15=(2.1/43.23)+Growth rate

Growth rate=0.15-(2.1/43.23)

=10.14%(Approx).

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Answer 2

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