A stock analyst assumes that a stock will not pay its first dividend until 12 years from today.

The dividend per share (DPS) at that time is assumed to be $6/share, and the DPS is assumed to stay $6/share forever.

The analyst finds a value of the stock today, P₀ = $21.03.

What value of the required return does the analyst assume?

a)		.3505 or 35.05%
b)		.285 or 28.5%
c)		.03505 or 3.505%
d)		.10 or 10%

Answer rating: 100% (QA)

The Expected Return for these Cash flows Required Rate ... View the full answer