The stock price of Alps Co. is $54.00. Investors require a return of 14 percent on similar stocks. If the company plans to pay a dividend of $3.65 next year, what growth rate is expected for the company’s stock price?

The stock price of Alps Co. is $54.00. Investors require a return of 14 percent on similar stocks. If the company plans to pay a dividend of $3.65 next year, what growth rate is expected for the company’s stock price?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The stock price of Alps Co. is $54.00. Investors require a return of 14 percent on similar stocks.

If the company plans to pay a dividend of $3.65 next year, what growth rate is expected for the company’s stock price? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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