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zysi [14]
3 years ago
9

Cole Company’s stock currently sells for $20 per share. It just paid dividends of $1.00 per share. The dividend is expected to g

row at a constant rate of 6% a year. What is the required rate of return?
Business
1 answer:
Komok [63]3 years ago
3 0

Answer:

The required rate of return is 11.3%

Explanation:

Required rate of return(ke) = D_{0} x (1+g) / P_{0} + g

                                            = 1 x (1 + 0.06) / 20 + 0.06

                                            = 1 x 0.053 / 20 + 0.06

                                             = 0.113

                                              = 11.3%

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