The common stock of Siegfried, Inc, a metal refining company, currently trades at $72 per share.  The firm is expected to earn $5.92 per share this year and is forecast to pay a dividend of $3.42 in one year.  The company is thought to be in a mature industry and is expected to have constant growth in the future.  If investors require an 8.5% return, what is the consensus growth rate for the firm?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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1 - The common stock of Siegfried, Inc, a metal refining company, currently trades at $72 per share.  The firm is expected to earn $5.92 per share this year and is forecast to pay a dividend of $3.42 in one year.  The company is thought to be in a mature industry and is expected to have constant growth in the future.  If investors require an 8.5% return, what is the consensus growth rate for the firm?

 

  1. 3.75%
  2. 4.75%
  3. 9.50%
  4. 12.25%
  5. 13.25%
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