Ask Question
30 September, 16:33

Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of $44.12, what is the return shareholders are expecting?

a) 15.69%

b) 14.10%

c) 12.74%

+1
Answers (1)
  1. 30 September, 16:36
    0
    a) 15.69%

    Explanation:

    The computation of the expected return is shown below:

    = (Current year dividend : current price) + growth rate

    where,

    Current year dividend = Dividend * (1 + dividend growth rate)

    = $0.46 * (1 + 14.5%)

    = $0.527

    And, the other item values remain the same

    Now put these values to the above formula

    So, the value would be equal to

    = ($0.527 : $44.12) + 0.145

    = 15.69%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent rate. At a current stock price of ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers