Universal Forest's current stock price is $154.00 and it is likely to pay a $5.23 dividend next year. Since analysts estimate Un
iversal Forest will have a 13.0 percent growth rate, what is its required return?
14.71 percent
15.28 percent
13.62 percent
16.40 percent
1 answer:
Answer:
16.40 percent
Step-by-step explanation:
-The growth rate is given by the formula:
Where
is the growth rate
is the required return
is the expected next dividend payout and current share prices respectively.
#We make R the subject of the formula and substitute to solve:
Hence, the required return is 16.40%
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