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lukranit [14]
3 years ago
6

Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock pr

ice of $44.12, what is the return shareholders are expecting?
a) 15.69%
b) 14.10%
c) 12.74%
Business
1 answer:
UNO [17]3 years ago
4 0

Answer:

a) 15.69%

Explanation:

The computation of the expected return is shown below:

= (Current year dividend ÷ current price) + growth rate

where,

Current year dividend = Dividend × ( 1 + dividend growth rate)

                                     = $0.46 × (1 + 14.5%)

                                     = $0.527

And, the other item values remain the same

Now put these values to the above formula

So, the value would be equal to

= ($0.527 ÷ $44.12) + 0.145

=  15.69%

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