Question
United Machinery Assembly Corp. (UMA) just announced that it is planning to pay its first semi-annual dividend two years from today. The first dividend is
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United Machinery Assembly Corp. (UMA) just announced that it is planning to pay its first semi-annual dividend two years from today. The first dividend is expected to be $4.40 per share, and subsequent semi-annual dividends are expected to grow by a semi- annual growth rate, which is 1% lower than the effective semi-annual required rate of return for this stock, forever. If the stock is currently selling for $410.92 per one UMA share, what is the effective annual required rate of return for this stock?
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
