Question

The common stock of NCP paid ​$1.50 in dividends last year. Dividends are expected to grow at an annual rate of 9.30 percent for an indefinite number of years.

a. If​ NCP's current market price is ​$25.87 per​ share, what is the​ stock's expected rate of​ return?

b. If your required rate of return is 11.3 ​percent, what is the value of the stock for​ you?

c. Should you make the​ investment?

a. If​ NCP's current market price is ​$25.87per​ share, the​ stock's expected rate of return is nothing​%.

​(Round to two decimal​ places.)

b. If your required rate of return is 11.3 ​percent, the value of the stock would be

​(Round to the nearest​ cent.)

c. You should ▼ sell or buy the stock because the expected rate of return is ▼less than or greater than your required rate of return or the value of the stock is▼ smaller than

or larger than the current market price.  ​(Select from the​ drop-down menus.)

Answer 1