Homework Answers
As per Dividend growth model formula is,
Price = D1/Re -g
27.49 = 2.3*1.04/Re - .04
27.49 *Re - 27.49* .04 = 2.392
27.49Re - 1.0996 = 2.392
Re = 2.392 + 1.0996/27.49
= 3.4916/27.49 * 100
12.7 %
Therefore expected Return = 12.7%
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