Bruer, Inc., is expected to maintain a constant 5.50 percent growth rate in its

Question

Bruer, Inc., is expected to maintain a constant 5.50 percent growth rate in its dividends, indefinitely. Required: If the company has a dividend yield of 4.00 percent, what is the required return on the company’s stock? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.161).)

Solve for the unknown interest rate in each of the following (Do not include the percent signs (%). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16)):

Solve for the unknown interest rate in each of the following (Do not include the percent signs (%). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16)):

Explanation / Answer

Calculate required rate of return:

Required rate of return on the company's stock = Dividend yield + Capital gainns yield

= 4% + 5.5%

= 9.5%

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