Expected to pay a year-end dividend


Albright Motors is expected to pay a year-end dividend of $3.00 a share (D1 = $3.00). The stock currently sells for $30 a share. The required (and expected) rate of return on the stock is 16 percent.

Question: If the dividend is expected to grow at a constant rate, g, what is g?

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Accounting Basics: Expected to pay a year-end dividend
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