?(Common stockholder expected return?) Alyward? & Bram common stock currently sells for $23.00 per share. The? company's...

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?(Common stockholder expected return?)
Alyward? & Bram common stock currently sells for $23.00 pershare. The? company's executives anticipate a constant growth rateof 10.5 percent and an? end-of-year dividend of $2.50.
a. What is your expected rate of? return?
b. If you require a return of 17 ?percent, should you purchasethe? stock?

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Solution a The expected rate of return of a stock is calculated using the following formula ke D1 P0 g Where P0 Current Price of the share See Answer

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?(Common stockholder expected return?)Alyward? & Bram common stock currently sells for $23.00 pershare. The? company's executives anticipate a constant growth rateof 10.5 percent and an? end-of-year dividend of $2.50.a. What is your expected rate of? return?b. If you require a return of 17 ?percent, should you purchasethe? stock?