The next dividend payment by Wyatt, Inc., will be $3.30 per share. The dividends are anticipated to maintain a growth rate of 2.75 percent, forever. Required: If the stock currently sells for $50.20 per share, what is the required return? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Required return % Explanation: We need to find the required return of the stock. Using the constant growth model, we can solve the equation for R. Doing so, we find: R = (D1 / P0) + g R = ($3.30 / $50.20) + .0275 R = .0932, or 9.32%

The next dividend payment by Wyatt, Inc., will be $3.30 per share. The dividends are anticipated to maintain a growth rate of 2.75 percent, forever.

Required:

If the stock currently sells for $50.20 per share, what is the required return? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Required return

%

 
Explanation:

We need to find the required return of the stock. Using the constant growth model, we can solve the equation for R. Doing so, we find:

R = (D1 / P0) + g

R = ($3.30 / $50.20) + .0275

R = .0932, or 9.32%