Tell Me Why Co. is expected to maintain a constant 6.4 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 8.2 percent, what is the required return on the company’s stock?
|Required return on company's stock is the sum of dividend yield and dividend growth rate.|
|Required return on the company's stock||=||Dividend growth rate + Dividend Yield|
|=||6.4% + 8.2%|
|Suppose current Price of share is $ 100|
|Next Year dividend||=||Current Price*Dividend Yield|
|Required Return on stock||=||(D1/P0)+g||Where,|
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