Purchase today? GeM Industries' common stock is currently selling for$72.15 per share. Last year, the company paiddividends of $1.25 per share. The projected growthrate of dividends for this stock is 4.85%. What rate ofreturn does an investor expect to receive on this stockif it is purchased today?

To calculate the expected rate of return on GeM Industries' common stock, we use the Gordon Growth…

Answered: GeM Industries' common stock is…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 5P

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GeM Industries' common stock is currently selling for $72.15 per share. Last year, the company paid dividends of $1.25 per share. The projected growth rate of dividends for this stock is 4.85%. What rate of return does an investor expect to receive on this stock if it is purchased today?