A firm just paid a dividend of $6 per share. Next year the dividend is expected to grow 8 percent, thereafter 10 percent forever. The present share price is $36. Calculate the required rate of return on the firm's equity. Express the response in decimal format

26%

Explanation:

MV=Do(1+g)/(Ke-g)

Where MV is market value=$36

Do is current dividend per share=$6

g is growth rate=8%

Ke=?  

By putting above values we get;

36=6(1+.08)/(Ke-.08)

36Ke-2.88=6+.48

36Ke=2.88+6+.48

Ke=9.36/36

Ke=26%

Solve for n 2(n-1)+4n=2(3n-1). 2(n−1)+4n=2(3n−1) 2 ( n - 1 ) + 4 n = 2 ( 3 n - 1 ). Simplify the left side. Tap for more steps... Simplify each term. Tap for more steps ...

Step-by-step explanation: