question archive Butler Corp paid a dividend today of $5 per share
Butler Corp paid a dividend today of $5 per share
Subject:FinancePrice:2.87 Bought7
Butler Corp paid a dividend today of $5 per share. The dividend is expected to grow at a constant rate of 6.5% per year. If Butler Corp stock is selling for $50.00 per share, the stockholders' expected rate of return
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Answer:
P0 = D1 / (r-g)
In this case, we want to find r
Plugging in the numbers, we get
50 = (5*1.065) / (r - 0.065)
r = 17.15% (expected rate of return)
