Paychex Inc. (PAYX) recently paid a dividend of $0.88. The dividend is expected to grow at...

Question

Question

Paychex Inc. (PAYX) recently paid a dividend of $0.88. The dividend is expected to grow at a 15 percent rate. The current stock price is $55.71.

What is the return shareholders are expecting? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

PLEASE HURRY!!!!

business finance

Answer 1

Answer #1

stock price = dividend next year/(Required return - growth rate)

=>

0.88 * (1+15%)/(return - 0.15) = 55.71

=>

return = (0.88 * 1.15)/55.71 + 0.15

= 16.82%

Answer 2

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