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(Stocks) A stock with the required rate of return of 13.68% is expected to pay a...

(Stocks) A stock with the required rate of return of 13.68% is expected to pay a $1.08 dividend over the next year. The dividends are expected to grow at a constant rate forever. The intrinsic value of the stock is $21.65 per share. What is the constant growth rate (in %, to the nearest 0.01%)? E.g., if your answer is 4.236%, record it as 4.24.

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Expert Solution

Growth rate using dividend discount model =Required Rate of Return-Dividend/Price =13.68%-1.08.21.65 =8.69%

jeff jeffy answered 2 years ago
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