Ask Question
6 December, 18:33

The stock price of Baskett Co. is $54.10. Investors require a return of 15 percent on similar stocks. If the company plans to pay a dividend of $3.70 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.) Growth rate %

+3
Answers (1)
  1. 6 December, 21:37
    0
    The growth rate is 8.17%

    Explanation:

    The formula to compute the growth rate is as follows:

    g = R - (D1 / P0)

    where

    g is growth rate

    R is return rate which is 15%

    P0 is stock price which is $54.10

    D1 is dividend which is $3.70

    By putting the values in the formula:

    g = 15% - (3.70 / $54.10)

    = 0.15 - 0.0683

    = 0.0817 or 8.17 %
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The stock price of Baskett Co. is $54.10. Investors require a return of 15 percent on similar stocks. If the company plans to pay a ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers