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Green Company's common stock is currently selling for $98.86 per share. Last year, the company paid...

Green Company's common stock is currently selling for $98.86 per share. Last year, the company paid dividends of $4.09 per share. The projected growth at a rate of dividends for this stock is 3.02 percent. Which rate of return does the investor expect to receive on this stock if it is purchased today?

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Answer #1

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

=(4.09*1.0302)/98.86+0.0302

which is equal to

=7.28%(Approx).

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