Question
Computer Corp. reinvests 60% of its profits in the company. The share is selling for $50 and the next dividend will be $2.50 per share.
Computer Corp. reinvests 60% of its profits in the company. The share is selling for $50 and the next dividend will be $2.50 per share. The discount rate is 15%. What is the firm's rate of return?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the firms rate of return we need to use the Dividend Discount Model DDM formula The rat...
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Step: 2
Step: 3
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
5th edition
1111527369, 978-1111527365
