Homework Answers
Last Dividend = $2.00
Growth Rate = 4%
Current Price = $20.00
Expected Dividend = Last Dividend * (1 + Growth Rate)
Expected Dividend = $2.00 * 1.04
Expected Dividend = $2.08
Required Rate of Return = Expected Dividend / Current Price +
Growth Rate
Required Rate of Return = $2.08 / $20.00 + 0.04
Required Rate of Return = 0.1040 + 0.04
Required Rate of Return = 0.1440 or 14.40%
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