Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you have been closely following the market perform

You have been closely following the market performance of a stock and, as of the...

80.2K

Verified Solution

Question

Finance

You have been closely following the market performance of a stock and, as of the market close yesterday, the price per share was $31.15 (therefore, P0 = $31.15). It is your belief that the company will pay a dividend per share of $1.75 next year, which implies that DIV1 = $1.75. Your statistical analysis of earnings and dividend growth of this company tells you that earnings and dividends increase at a constant rate of 4.40 percent per year (meaning g = 4.40%). Under the assumption this stock behaves as a constant growth stock according to the Gordon growth model (or dividend discount model), what is the implied market rate of return on this stock (that is, find rE)? Please round your answer to the second decimal place.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Caspian Sea Drinks is considering the purchase of a plum juicer – the PJX5. There is...

Chemistry
1.2K views

Calculate the quantity of energy, in joules, required to raise the temperature of 486 g tin...

Medical Sciences
1.2K views

3.sometimes we use them interchangeably but they really are two very different things - salt and...

Psychology
1.2K views

Sociology: Discuss the similarities and differences between race and ethnicity. Give an example of each.

General Management
1.2K views

How HCQ and LANCET have influence of power, finance , politics, and how does it affect...

Biology
1.2K views

For the following bacteria observed as flagella stains determine the flagella arrangement and cell shape...

Calculus
1.2K views

Convert to Celsius Use C 11 F 59

Algebra
1.2K views

ev Find the value of the following function at x 6 and x between these...

Accounting
1.2K views

The variable overhead rate is $5.00 per direct labor hour; 31,000 direct labor hours were...

Accounting
1.2K views

M3-4 Identifying Expenses 02,3 The following transactions are Jely 2011 activities of Craig's...

Accounting
1.2K views

Missing Amounts from Balance Sheet and Income Statement Data One item is omitted from each...

Accounting
1.2K views

A company started the current year with assets of $700,000, liabilities of $350,000 and common...