Based on the following information, determine the amount of equipment on the balance sheet. Total liabilities and owner's equity
1 answer:
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Answer:
14.90%
Explanation:
We know,
Current stock price, =
Given,
Current stock price, = $12.00
growth rate, g = 9.50% = 0.095
Expected annual dividend, = $0.65
We have to determine the expected rate of return ().
Putting the values into the above formula, we can get,
Current stock price, =
or, $12.00 = $0.65 ÷ ( - 0.095)
or, $12.00 × ( - 0.095) = $0.65
or, - 0.095 = $0.65 ÷ $12.00
or, - 0.095 = 0.0542
or, = 0.054 + 0.095
Therefore, = 0.149
The expected rate of return = 0.149 or 14.90%