Jand, Inc., currently pays a dividend of $1.22, which is expected to grow indefi

Question

Jand, Inc., currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of Jand’s shares based on the constant-growth dividend discount model is $32.03, what is the required rate of return? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Jand, Inc., currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of Jand’s shares based on the constant-growth dividend discount model is $32.03, what is the required rate of return? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Explanation / Answer

Required return ( r) D1÷P0+g Here, Stock price (P0) $                                                        32.03 Expected dividend (D1) $                                                          1.28 1.22*(1+5%) Growth rate (g) 5.00% Required return ( r) 9.00% $1.28/$32.03+5%

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