Bennett, Inc.'s common stock currently sells for $22.50 per share. The company's executives anticipate a constant growth

Question:

Bennett, Inc.'s common stock currently sells for $22.50 per share. The company's executives anticipate a constant growth rate of 10 percent and an end-of-year dividend of $2.

a. What is your expected rate of return if you buy the stock for $22.50?

b. If you require a 17 percent return, should you purchase the stock?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...