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According to your research, the growth rate in dividends for DR Dime for the previous 10 years has been negative 14 percent. If investors feel this growth rate will continue, what is the required return for DR Dime stock?

Respuesta :

Tundexi

The required return for DR Dime stock will be -9.07% If the investors felt the growth rate will continue.

What is the formula for required return?

The formula for required return is Ke = (D0(1+q)/P0 + q)

Given data

D0 = 0.89

G = -14%

P0 = 15.52

Required return = (0.89*(1-0.14)/15.52) +-0.14

Required return = 0.0493170103 - 0.14

Required return = -0.0906829897

Required return = -9.07%

In conclusion, the required return for DR Dime stock is -9.07%.

Missing options "You've collected the following information from your favorite financial website. 52-Week PriceStock (Div)DivYld %PERatioClosePriceNetChgHiLo77.40 10.43 Palm Coal .362.6 6 13.90 -.24 55.81 33.42 Lake Lead Grp 1.543.8 10 40.43 -.01 130.93 69.50 SIR 2.002.2 10 88.97 3.07 50.33 14.04 DR Dime .895.7 6 15.52 -.26 35.00 20.74 Ca"

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