A company recently paid a $1.05 dividend. The dividend is expected to grow at a

Question

A company recently paid a $1.05 dividend. The dividend is expected to grow at a 16.1 percent rate. At a current stock price of $71.75, what return are shareholders expecting? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

A company recently paid a $1.05 dividend. The dividend is expected to grow at a 16.1 percent rate. At a current stock price of $71.75, what return are shareholders expecting? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Rate of Return = D1/Current Stock Price + Growth Rate = 1.05*(1+.161)/71.75 + .161 = 17.80%

Answer is 17.80%

Thanks.

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