Assume ExxonMobil's price dropped to $30 overnight. Given the dividend growth rate of ExxonMobil of 4.00%...
Assume ExxonMobil's price dropped to $30 overnight. Given the dividend growth rate of ExxonMobil of 4.00% and the last annual dividend of $1.60, what is the implied required rate of return necessary to justify the new lower market price of $30?
(Round to two decimal places.)
Homework Answers
as per growth model,
required rate of return = D0(1+growth rate) / Price + growth rate
=>$1.60*(1.04)/ $30 + 0.04
=>0.05546667+0.04
=>0.09546667
=>9.55%
required rate of return = 9.55%.
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