What is the expected rate of return on the stock, Finance Basics

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What is the expected rate of return on the stock

Problem

Steady As She Goes Inc. will pay a year-end dividend of $3.80 per share. Investors expect the dividend to grow at a rate of 6% indefinitely.

1. If the stock currently sells for $38.00 per share, what is the expected rate of return on the stock?

2. If the expected rate of return on the stock is 18.50%, what is the stock price?

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Finance Basics: What is the expected rate of return on the stock

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Finance Basics: What is the expected rate of return on the stock

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