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liraira [26]
3 years ago
7

g . Kings Donut Inc common stock sells for $39.86 a share at a market rate of return of 9.5%. The company just paid its annual d

ividend of $1.20. What is the rate of growth of its dividend? Assume stock is in equilibrium.
Business
1 answer:
Simora [160]3 years ago
7 0

6.29% is the rate of growth

<u>Explanation:</u>

<u>The following formula is used </u>

Price = D1 / ke -g

39.86 = 1.2 multiply with (1 + g) / 0.095 - g

3.7867 – 39.86 g = 1.2 + 1.2 g

2.5867 = 41.06 g

Now, we have to calculate the value of g  

g = 2.5867 divide 41.06

= 0.0629  

= 6.29 %

Where:

G = growth, ke = market rate of return, D1 = dividend ( annual), P = price of the share of company

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Explanation:

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3 years ago
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Answer:

Answer for the question:

Assume that the hypothetical economy of Molpol has 8 workers in year 1, each working 1,200 hours per year (40 weeks at 30 hours per week). The total input of labor is 9,600 hours. Productivity (average real output per hour of work) is $10 per worker

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