Question
Asked Feb 2, 2020
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Arts and Crafts, Inc. will pay a dividend of $2 per share in 1 year. It sells at $40 a share, and firms in the same industry provide an expected rate of return of 10%. What must be the expected growth rate of the company’s dividends? (Do not round intermediate calculations. Enter your answer as a whole percent.)

 

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Expert Answer

Step 1

The expected growth rate of the company’s dividend is 5%.

Computation of expected growth rate:

Formula:

Finance homework question answer, step 1, image 1

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