EBK INVESTMENTS
EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 18, Problem 5PS
Summary Introduction

To calculate: Required return rate of the stock when the current value of the shares is $32.03.

Introduction: The rate of return requires is the requirement for using the capital and fulfills the prospect. It represented by ‘k’.

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Jand, Inc., currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of Jand’s shares based on the constant-growth dividend discount model is $32.03, what is the required rate of return?
A firm pays a current dividend of $1.00 which is expected to grow at a rate of 5% indefinitely. If current value of the firm’s shares is $35.00, what is the required return based on the constant-growth dividend discount model (DDM)?
A firm pays a current dividend of $1, which is expected to grow at a rate of 6% indefinitely. If the current value of the firm's shares is $106, what is the required return applicable to the investment based on the constant-growth dividend discount model (DDM)? (Do not round intermediate calculations.)
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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY