Dexter Industries stock has a price of $25.50 today. The stock\'s year-end (or n

Question

Dexter Industries stock has a price of $25.50 today. The stock's year-end (or next) dividend is expected to be $3.15 per share, and Dexter's earnings per share and dividends per share have grown at a constant rate over a long period of time. The required rate of return for a firm of Dexter's market risk is 16% (so that r(s) = 0.16). Based on these facts, what is the expected growth rate in dividends, g, for Dexter Industries? Also, what will be the expected price of Dexter's stock 10 years from today (3/24/2023)?

Explanation / Answer

growth g=3.647% value of stock after 10 years =28.80624

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