Steady As She Goes, Inc., will pay a year-end dividend of $3.30 per share. Inves

Question

Steady As She Goes, Inc., will pay a year-end dividend of $3.30 per share. Investors expect the dividend to grow at a rate of 4% indefinitely.

If the stock currently sells for $33 per share, what is the expected rate of return on the stock? (Do not round intermediate calculations.)

If the expected rate of return on the stock is 16.5%, what is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

If the stock currently sells for $33 per share, what is the expected rate of return on the stock? (Do not round intermediate calculations.)

Explanation / Answer

a) 3.3/33 *100 =10% rate of return

b) 16.5=3.3*100/x

x= 20 $ per share

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