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The question is: Ford Motor paid an annual dividend of $.60 in 2018. It is expected that the company will continue to pay dividend and
The question is: Ford Motor paid an annual dividend of $.60 in 2018. It is expected that the company will continue to pay dividend and dividend will growth at 7%. Given the market price of $8.70, what is the required rate of return for Ford's equity?
Here is what I did..... I took $.60*(1+.07) = $.642 to capture the 7% growth rate and divided it by the market price of $8.70..... So, $.642/$8.70 = 7.3793% rate of return on Ford's equity. Am I missing something?
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