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    Garage, Inc: What is the required return on company stock. Show formula.

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    Garage, Inc., is expected to maintain a constant 5 percent growth rate in its dividends, indefinitely. If the company has a dividend yield of 7.5 percent, what is the required return on the company's stock?

    What is the formula to solve this?

    © BrainMass Inc. brainmass.com December 24, 2021, 4:42 pm ad1c9bdddf

    Solution Preview

    Please refer to attached file.

    Assuming that the cash dividend payment change at the rate of 5% from one period to the next indefinitely,
    P0 = ------------- where P0 = price of ...

    Solution Summary

    The solution displays the formula, the calculations and good explanations.