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label Business
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

If the price of Toms Handbags Inc. stock is $43, it required return is 20%, and the last dividend was $3, what is its dividend growth rate? ( Round to the nearest tenth)

Oct 18th, 2017

Thank you for the opportunity to help you with your question!

Stock Price = D1 ÷ (k – g)

43 =3/(20-g)

20-g = 3/43 ;  20-g =0.069

g = 20-0.069 =  19.93 %.

Hence Answer = 19.9%

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Jul 15th, 2015

Incorrect answer

Jul 15th, 2015

Answer : 12.2%

Jul 15th, 2015
1.jpg

yes this answer is correct

Jul 15th, 2015

thanks

Jul 15th, 2015

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