Explore BrainMass

Explore BrainMass

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

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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 March 4, 2021, 5:37 pm ad1c9bdddf
    https://brainmass.com/business/beta-and-required-return-of-a-project/garage-inc-what-is-the-required-return-on-company-stock-show-formula-2668

    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,
    D1
    P0 = ------------- where P0 = price of ...

    Solution Summary

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

    $2.49

    ADVERTISEMENT