Given the following information for the stock of Foster Company, calculate the risk premium on its common

Question:

Given the following information for the stock of Foster Company, calculate the risk premium on its common stock.

Current price per share of common ........$50.00

Expected dividend per share next year ......$ 3.00

Constant annual dividend growth rate ....... 9%

Risk-free rate of return ............ 7%

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...