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    dazzle343's Avatar
    dazzle343 Posts: 1, Reputation: 1
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    #1

    Sep 21, 2008, 09:40 AM
    Required rate of return
    Stocks sells at $60 per share and pays a dividen of $5 a year what is the required rate of return.
    manik chand dey's Avatar
    manik chand dey Posts: 63, Reputation: 2
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    #2

    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.
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