You’ve collected the following information from your favorite financial website.
ID: 2751641 • Letter: Y
Question
You’ve collected the following information from your favorite financial website.
According to your research, the growth rate in dividends for Palm Coal for the previous 10 years has been 4.00 percent.
If investors feel this growth rate will continue, what is the required return for Palm Coal stock? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Required Return _____%
Required:If investors feel this growth rate will continue, what is the required return for Palm Coal stock? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Required Return _____%
Explanation / Answer
Price = Dividend at year 1/ required rate of Return- Growth Rate
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