An issue of common stock is selling for $65.50. The year-end dividend is expected to be $2.80, assuming a constant growth rate of 5%. What is the required rate of return? a) 9.28% b) 9.78% c) 4.27% d) None of the above

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 18MC
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An issue of common stock is selling for $65.50. The
year-end dividend is expected to be $2.80, assuming a
constant growth rate of 5%. What is the required rate
of return?
a) 9.28%
b) 9.78%
c) 4.27%
d) None of the above
Transcribed Image Text:An issue of common stock is selling for $65.50. The year-end dividend is expected to be $2.80, assuming a constant growth rate of 5%. What is the required rate of return? a) 9.28% b) 9.78% c) 4.27% d) None of the above
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