Question
LewCo, a construction company, pays an annual dividend to the stock owners on the last day of each year. LewCo paid a dividend of $10
LewCo, a construction company, pays an annual dividend to the stock owners on the last day of each year. LewCo paid a dividend of $10 per share on December 31, 2019. LewCo has increased the dividend by 6% per year since the company started in 1958, and investors believe this will continue.2. Today is January 1, 2020, and the stock price is $400 per share. What expected return (r*, discount rate, cost of capital) are investors attaching to LewCo based on the Gordon Growth Model? Write your answer in percentage points and basis points, for example, 12.34%. Answer _____.___ ___%
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