XYZ common stock has a current dividend of $2.22 and a current market value of $30. Dividends are expected to grow at a 6% rate forever. What rate of return is implied by the current market value?

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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What rate of return is implied by the current market value of this Financial Accounting Question?

XYZ common stock has a current dividend of
$2.22 and a current market value of $30.
Dividends are expected to grow at a 6% rate
forever. What rate of return is implied by the
current market value?
Transcribed Image Text:XYZ common stock has a current dividend of $2.22 and a current market value of $30. Dividends are expected to grow at a 6% rate forever. What rate of return is implied by the current market value?
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