Question
Asked Nov 11, 2019
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Universal Forest’s current stock price is $64.00 and it is likely to pay a $0.47 dividend next year. Since analysts estimate Universal Forest will have a growth rate of 13.6 percent, what is its required return? (Round your answer to 2 decimal places.)

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Expert Answer

Step 1

Given that the current stock price is $64, expected next year dividend id $0.47 and the growth rate is 13.6%

Step 2

We need to use the equation below to determine the required return. 

Step 3
Current price (Next year dividend) (Required return Growth rate)
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Current price (Next year dividend) (Required return Growth rate)

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