Consider a stock that is expected to pay a dividend of $0.93 a year from now....
Consider a stock that is expected to pay a dividend of $0.93 a year from now. The current price of the stock is $45.18. The expected rate of return on the stock is 13%. What must be the expected growth rate of the dividends? Enter your answer as a percentage. Do not enter the percentage sign into your answer.
Enter your response below rounded to 2 DECIMAL PLACES
Homework Answers
Ans 10.94
| P0 = | Price of Share |
| D1 = | Current Dividend |
| Ke = | Cost of Equity |
| g = | growth rate |
| P0 = | D1 / (Ke - g) |
| 45.18 = | 0.93 / (13%- g) |
| 13% - g = | 0.93 / 45.18 |
| 13% - g = | 2.06% |
| g = | 13% - 2.06% |
| g = | 10.94% |
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