Garage, Inc: What is the required return on company stock. Show formula.
Garage, Inc., is expected to maintain a constant 5 percent growth rate in its dividends, indefinitely. If the company has a dividend yield of 7.5 percent, what is the required return on the company's stock?
What is the formula to solve this?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/garage-inc-what-is-the-required-return-on-company-stock-show-formula-2jc
...e stock at time 0
(r - g) D1 = dividend payment for time 1 ie. 7.5%of P0
r = required return
g = growth rate of 5%
? Price of stock ...