question archive Universal Forest's current stock price is $154
Universal Forest's current stock price is $154
Subject:FinancePrice:2.87 Bought7
Universal Forest's current stock price is $154.00 and it is likely to pay a $5.23 dividend next year. Since analysts estimate Universal Forest will have a 13.0 percent growth rate, what is its required return? Multiple Choice
15.28 percent
13.62 percent
14.71 percent
16.40 percent
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Answer:
| As per dividend discount model, | ||||
| Required return | = | (D1/P0)+g | ||
| = | (5.23/154.00)+0.130 | |||
| = | 16.40% | |||
| Where, | ||||
| D1 | = | Next Dividend | = | $ 5.23 |
| P0 | = | Current Price | = | $154.00 |
| g | = | Growth Rate | = | 13.0% |
