Question
Marco owns one share of stock of Platinum Water Media and one share of stock of Silver Sun Consulting. The total value of his holdings
Marco owns one share of stock of Platinum Water Media and one share of stock of Silver Sun Consulting. The total value of his holdings is 118.33 dollars. Both stocks pay annual dividends that are expected to continue forever. The expected return for Platinum Water Media stock is 14.42 percent and its annual dividend is expected to remain at 7.13 dollars forever. What is the expected return for Silver Sun Consulting stock if its next dividend is expected to be 6.02 dollars and all subsequent dividends are expected to grow by 2.63 percent annually? The next dividend for both firms stocks will be paid in one year. Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
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