According to the 2018 Value Line Investment Survey, the growth rate in dividends for Ralph Lauren for the next five years will be. 5 percent. If investors feel this growth rate will continue, what is the required return for the company's stock?

Question

Jenny Molina

Business

29 December, 00:28

According to the 2018 Value Line Investment Survey, the growth rate in dividends for Ralph Lauren for the next five years will be. 5 percent. If investors feel this growth rate will continue, what is the required return for the company's stock?

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Answers (1)

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Humberto · Answer 1

Higher than 0.5%

Explanation:

Since the rate of return is calculated as dividend payment/stock price + dividend growth rate and since that growth rate for the next five years will be 0.5 %, than rate of return will be higher than 0.5 %.