PDA

View Full Version : Required rate of return


dazzle343
Sep 21, 2008, 09:40 AM
Stocks sells at $60 per share and pays a dividen of $5 a year what is the required rate of return.

manik chand dey
Sep 22, 2008, 11:05 PM
P(current market price)=D(dividend)/r

where r is the required rate of return

P=$60, D=$5
Here it is mentioned that it pays a dividend of $5 a year. That is it is case of perpetuity.
Put the formula get the answer.