The Sisyphean Company is currently trading for $25.00 per share. The company is expected to pay...

The Sisyphean Company is currently trading for $25.00 per share. The company is expected to pay a $2.50 dividend at the end of the year and its equity cost of capital is 14%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Sisyphean Company's earnings is closest to:

Expert Solution

Equity cost of capital=(D1/Current price)+Growth rate

0.14=(2.5/25)+Growth rate

Growth rate=0.14-(2.5/25)

=4%

jeff jeffy answered 2 years ago

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