Question

BLUE's most recent dividend was $.90. Their stock is trading at

$23. What is the expected return % if their growth rate is 4%?

Answer 1

Considering the dividend as well as the stock price, we can compute the expected return percent. The expected return % for BLUE stock with a growth rate of 4% is 7.91%.

Step-by-step explanation:

To calculate the expected return %, we need to consider both the dividend and the stock price. The formula for expected return % is (dividend / stock price) + growth rate. In this case, the dividend is $.90 and the stock price is $23. The growth rate is given as 4%.

So, the expected return % = ($.90 / $23) + 4% = 0.0391 + 4% = 0.0791 or 7.91%.

Therefore, the expected return % is 7.91%.