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25 March, 12:04

A stock is expected to maintain a constant dividend growth rate of 4.2 percent indefinitely. If the stock has a dividend yield of 5.5 percent, what is the required return on the stock

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  1. 25 March, 12:09
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    Required return = (dividend / price per share) + constant growth rate.

    Dividend yield on the stock = (dividend / price per share) = 5.5%

    Therefore, Required return = 5.5% + 4.2% = 9.7%
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