question archive The expected constant-growth rate of dividends is _% for a stock currently priced at $68, that just paid a dividend of $5, and has a required return of 20%?
The expected constant-growth rate of dividends is _% for a stock currently priced at $68, that just paid a dividend of $5, and has a required return of 20%?
Subject:FinancePrice:2.86 Bought3
The expected constant-growth rate of dividends is _% for a stock currently priced at $68, that just paid a dividend of $5, and has a required return of 20%?
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Statement showing computation:
Current price= Dividend*(1+growth)/(return-growth)
68= 5*(1+growth)/(0.20-growth)
68*(0.20-growth)= 5+5*growth
13.6-68*growth= 5+5*growth
8.6= 73*growth
Growth= 8.6/73= 11.78%
Growth= 11.78%
