Zero growth: A communications company pays annual dividends of $8.50 with no possibility of it changing in the next several years. If the company's share is currently selling at $60.71, what is the required rate of return? (Round to nearest whole number.)

Question

Quizplus · Accepted Answer

The required rate of return can be calculated using the formula for a zero-growth dividend: Required Rate of Return = Dividend / Price. Here, it is $8.50 / $60.71 = 0.1399, which rounds to 14%.

Zero Growth: a Communications Company Pays Annual Dividends of $8