A stock has just paid a dividend of $2.20. The next dividend on the stock will be paid one year from today and each subsequent dividend will be old one year after the previous dividend. Each annual dividend is expected to be 2.5% greater than the previous dividend. The price of the stock is $42.80. What is the discount rate being used to value the stock? 

Answer rating: 100% (QA)

To calculate the discount rate being used to value the stock we can use the dividend discount model ... View the full answer