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Sarval Corp is expected to pay a dividend next year of $2.2 per share. The dividend...

Sarval Corp is expected to pay a dividend next year of $2.2 per share. The dividend is expected to grow at a constant rate of 3% per year. If Sarval Corp stock is selling for $22.37 per share, what is the stockholders' expected rate of return?  Submit your answer as a percentage and round to two decimal places (Ex. 0.00%)

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Answer #1

expected rate of return=(D1/Current price)+Growth rate

=[(2.2/22.37)]+0.03

which is equal to

=12.83%(Approx).

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