Question

What is the required return for a stock that has a constant-growth rate of 3.3%, a price of $25, an expected dividend of $2.10, and a P/E ratio of 14.4?

Answer 1

11.7%

Step-by-step explanation:

The required rate of return = (D1/ / price) + g

The required rate of return = (2.1 / 25) + 0.033

The required rate of return = 0.084 + 0.033

The required rate of return = 0.117

The required rate of return = 11.7%