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jdvazquez18p7a7vs
29.07.2020 •
Business
Use the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $4.32 per share in one year. ELO shares are currently trading for $92.51 on the NYSE, and the expected annual rate of return for ELO shares is 9.82%. Answer as a % to 2 decimal places (e.g., 12.34% as 12.34).
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Ответ:
5.15%
Explanation:
The Constant Dividend Growth Model is used to calculate the price of a stock given the next dividend that will be paid on it, its required return and its constant growth rate by the formula;
Price =![\frac{Next Dividend}{Rate of Return - Growth rate}](/tpl/images/0714/8526/5548e.png)
$92.51 =![\frac{4.32}{0.0982 - growth rate}](/tpl/images/0714/8526/1698b.png)
9.084482 - 92.51g = 4.32
9.084482 - 4.32 = 92.51g
92.51g = 4.764482
g = 0.0515
g = 5.15%
Ответ: