# Growth Rate of Stocks and Dividend

1. a. Computer stocks currently provide an expected rate of return of 16%. Dell, a large computer company, will pay a year-end dividend of $2 per share. If the stock is selling at $50 per share, what must be the market's expectation of the growth rate of Dell dividends?

1. b. If dividend growth forecasts for Dell are revised downward to 5% per year, what will happen to the price of Dell stock? What (qualitatively) will happen to the company's price-earnings ratio?

© BrainMass Inc. brainmass.com June 3, 2020, 10:35 pm ad1c9bdddfhttps://brainmass.com/statistics/descriptive-statistics/growth-rate-computer-stocks-239015

#### Solution Preview

Growth Rate

1. a. Computer stocks currently provide an expected rate of return of 16%. Dell, a large computer company, will pay a year-end dividend of $2 per share. If the stock is selling at $50 per share, what must be the market's expectation of the growth rate of Dell ...

#### Solution Summary

The solution examines growth rate for computer stocks. The market expectations of the growth rate for Dell dividends is examined.