he next dividend payment by Blue Cheese, Inc., will be $1.40 per share. The divi

Question

he next dividend payment by Blue Cheese, Inc., will be $1.40 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $25 per share, what is the required return? (Round your answer to 2 decimal places. (e.g., 32.16))

he next dividend payment by Blue Cheese, Inc., will be $1.40 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $25 per share, what is the required return? (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Answer: Required Return: (Dividend/Market price)+growth rate

=($1.40/$25)+0.06

=11.6%

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