The constant-growth dividend discount model can be used both for the valuation of companies and...
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Accounting
The constant-growth dividend discount model can be used both for the valuation of companies and for the estimation of the long-term total return of a stock.
| Assume: | $10 | = | Price of a Stock Today |
| 10% | = | Expected Growth Rate of Dividends | |
| $0.78 | = | Annual Dividend One Year Forward |
Using only the preceding data, compute the expected long-term total return on the stock using the constant-growth dividend discount model. Do not round intermediate calculations. Round your answer to two decimal places.
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