A stock is expected to pay a dividend of $3.00 in one year.To purchase the stock,investors seek a 15% annual return.If the stock is currently trading at $60,what is the implied constant growth rate in dividends for the future?

Name: A stock is expected to pay a dividend of $3.00 in one year.To purchase the stock,investors seek a 15% annual return.If the stock is currently trading at $60,what is the implied constant growth rate in dividends for the future?
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Question

Quizplus · Accepted Answer

$60 = $3/(.15-g)
.15-g = $3/$60

A Stock Is Expected to Pay a Dividend of $3