What growth rate would you have to use in the


In October 1997, Briggs & Stratton, a small engine manufacturer, was expecting to pay an annual dividend of $1.13 in 1998. The firm's stock was selling for $49. The stock's beta is 1.10. What is Briggs & Stratton's dividend yield? Compute the expected rate of return for this stock if the market return rate of the company is 17.6 percent while the U.S. T-Bill rate is 3.8 percent. What growth rate would you have to use in the multiple-period valuation model to get the same expected return as you computed previously? What is Briggs & Stratton's capital gains yield?

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Finance Basics: What growth rate would you have to use in the
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