Question
8-16. (Common stock valuation) The common stock of Hyundai Motors paid $1.65 in dividends last year. Dividends are expected to grow at a 7 percent
8-16. (Common stock valuation) The common stock of Hyundai Motors paid $1.65 in dividends last year. Dividends are expected to grow at a 7 percent annual rate for an indefinite number of years.
a. If Hyundais current market price is $25.50 per share, what is the stocks expected rate of return?
b. If your required rate of return is 12.5 percent, what is the value of the stock for you?
8-30. (Common stockholder expected return) The common stock of Martin Co. is selling for $32.84 per share. The stock recently paid dividends of $2.94 per share and has a projected constant growth rate of 9.5 percent. If you purchase the stock at the market price, what is your expected rate of return?
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