Question

What is the implied growth rate of the Federal Express dividend based on the constant growth dividend discount model? Assume the required rate of return is 11.4% and price is 5000 for 100 share. Current dividend is 3.40 show your steps?

Answer 1

The implied growth rate of the Federal Express dividend can be calculated using the constant growth dividend discount model.

Step-by-step explanation:

The implied growth rate of the Federal Express dividend can be calculated using the constant growth dividend discount model. In this model, the growth rate of the dividend is assumed to remain constant. To calculate the implied growth rate, we can use the formula:

Implied Growth Rate = (Dividend / Price) - 1

Given that the current dividend is $3.40 and the price is $5000 for 100 shares, we can substitute these values into the formula:

Implied Growth Rate = (3.40 / 5000) - 1 = 0.00068 or 0.068%