Choose a publicly traded stock from New York Stock Exchange or a NASDAQ that has not been chosen by other students. Estimate its required rate of return based on the dividend growth model. Hint: The dividend growth model is discussed on page 218, 11th edition in the Component of the required return section. It is also discussed in my lecture notes on page 5. Most required variables for this discussion can be found in Yahoo/finance.

I chose Sephora

Example:

Company: Apple Inc.

Current stock price per share: $150.91

Recent annual dividend payment per share: $3.28

Assumed constant growth rate: 5%

Required Rate of Return = ($3.28 / $150.91) + 5% = 2.28%