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Calculating the expected return on equity

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What return on equity do investors expect for a firm with a $17 stock price, a dividend in year one of $2.00, a beta of 1.6, and a constant growth rate of 2%?

1. 13.76%
2. 26.00%
3. 11.75%
4. 16.33%
5. 17.21%

© BrainMass Inc. brainmass.com September 24, 2018, 6:16 pm ad1c9bdddf - https://brainmass.com/business/flow-to-equity/calculating-the-expected-return-on-equity-446089

Solution Summary

Solution determines the expected return on equity in the given case.

$2.19