Nell Corporation stock is currently selling for $18.50. The stock is expected to pay a dividend...

Nell Corporation stock is currently selling for $18.50. The stock is expected to pay a dividend of $75 at the end of the year. Dividends are expected to grow at a constant rate of 4% indefinitely. Compute the expected rate of return on Nell Corporation stock.

Expert Solution

I think the dividend you have mentioned in question i.e $ 75 is wrong.there must be some typing error.It must be either $ 7.50 or $0.75.I have solved the question for both the possibilities. And if its any other figure let me know,I will provide solution accordingly.

Calculations-

Please upvote if the ans is helpful.In case of doubt,do comment.Thanks.

jeff jeffy answered 2 years ago

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