# grey manufacturing is expected to pay a dividend of \$1.25 per share at the end of the year (D1=\$1.25). The stock sells fo \$27.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

Question
6 views

grey manufacturing is expected to pay a dividend of \$1.25 per share at the end of the year (D1=\$1.25). The stock sells fo \$27.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

check_circle

Step 1

Calculation of expected growth rate:

Hence, the expected growth rate is 5.95%.

...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in