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Expected Rate of Growth for Stock Dividends

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X Inc. has just paid a dividend of $3.00, and is now selling for $50 per share. Similar stocks generally earn a 13% return. Assuming that X Inc. is a constant growth stock, what is its expected rate of growth?

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Solution Summary

This solution contains step-by-step calculations to determine the expected rate of growth. All formulas and workings are shown.

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D = 3
P = 50
K = 13%
By DDM, we have the following ...

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