Discount rate that the market is using, Accounting Basics

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Discount rate that the market is using

Problem:

The common stock of Answers Co. is currently trading at $56. The company just paid a $2.2 dividend to its shareholders, and targets a 4.7 percent growth rate in its dividends year over year.

Requirement:

Question: What is the discount rate that the market is using to price this stock?

Note: Provide support for your underlying principle.

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Accounting Basics: Discount rate that the market is using

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Accounting Basics: Discount rate that the market is using

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