Stocks sells at $60 per share and pays a dividen of $5 a year what is the required rate of return.
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Stocks sells at $60 per share and pays a dividen of $5 a year what is the required rate of return.
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.
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