What is the required rate of return on a share that is expected to pay a constant dividend of $4.50 in perpetuity and is priced at $47.50?

Name: What is the required rate of return on a share that is expected to pay a constant dividend of $4.50 in perpetuity and is priced at $47.50?
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Quizplus · Accepted Answer

The required rate of return can be calculated using the formula for a perpetuity: Required Rate of Return = Dividend / Price = $4.50 / $47.50 = 0.0947 or 9.47%.

What Is the Required Rate of Return on a Share