is 4 0% According to the dividend growth model, what is this stock's total expected rate...

Question

Question

Answer 1

Answer #1

As per Dividend growth model formula is,

Price = D1/Re -g

27.49 = 2.3*1.04/Re - .04

27.49 *Re - 27.49* .04 = 2.392

27.49Re - 1.0996 = 2.392

Re = 2.392 + 1.0996/27.49

= 3.4916/27.49 * 100

12.7 %

Therefore expected Return = 12.7%

Answer 2

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