Given that the cost of common stock is 9 percent,dividends are $0.75 per share and the price of the stock is $12.50 per share,what is the annual growth rate of dividends?

Question

Quizplus · Accepted Answer

We can use the Gordon Growth Model to calculate the annual growth rate of dividends:

Cost of common stock = 9%

Dividends = $0.75 per share

Price of the stock = $12.50 per share

Using the formula 
9% = (0.75 / 12.50) + g

Solving the equation for g, we get:

g = 3%

Therefore, the annual growth rate of dividends is 3%.

Given That the Cost of Common Stock Is 9 Percent,dividends