Question
1. Waterworks has a dividend yield of 14.34%. If its dividend is expected to grow at a constant rate of 29.45%, what must be the
1.
Waterworks has a dividend yield of 14.34%. If its dividend is expected to grow at a constant rate of 29.45%, what must be the expected rate of return on the companys stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
2.
Steady As She Goes, Inc., will pay a year-end dividend of $3.95 per share. Investors expect the dividend to grow at a rate of 3.21% indefinitely. |
a. | If the stock currently sells for $13.67 per share, what is the expected rate of return on the stock? (Do not round intermediate calculations.) |
Expected rate of return | % |
b. | If the expected rate of return on the stock is 14.21%, what is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Stock price | $ |
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