Question

Based on the information just given, what will be Robert’s forecast of PAMC’s growth rate? 7.75% 0.02% 4.50% 3.00%

Answer 1

Answer:

the growth rate is 3%

Explanation:

The computation of the PAMC growth rate is shown below:

Price of the stock = Current year dividend ÷ (required rate of return - growth rate)

$16.25 = $0.78 ÷ (0.078 - growth rate)

0.078 - growth rate = 0.048

So, the growth rate is 3%

We simply applied the above formula so that the correct value could come

And, the same is to be considered