Answer:
required return = 9.32 %
Explanation:
given data
dividend payment = $3.30 per share
growth rate of 2.75 %
stock currently sells = $50.20 per share
to find out
required return
solution
we will apply here required return formula that is express as
required return = [tex]\frac{D}{p}[/tex] + g
here D is dividend at the end of year i.e 3.30 and p is price at the beginning i.e. 50.20 and g is growth rate of 2.75%
so put all these value we get
required return = [tex]\frac{D}{p}[/tex] + g
required return = [tex]\frac{3.30}{50.20}[/tex] +2.75%
required return = 6.57% + 2.75%
required return = 9.32 %
