Question

Last year, Logistics paid an annual dividend of $2.20 and announced that all future dividends would be $2.25 a share indefinitely. What is your required rate of return if you are willing to pay $15.25 a share for this stock

Answer 1

Answer:

14.75%

Explanation:

Calculation for the required rate of return

Using this formula

Required rate of return=Future Dividend/Share amount

Let plug in the formula

Required rate of return= 2.25 / 15.25

Required rate of return= .1475 *100

Required rate of return=14.75%

Therefore the Required rate of return is 14.75%