Question: P7-4 Expected Return Ecolap Inc. (ECL) recently paid a $0.50 dividend. The dividend is expected to grow at a 12 percent rate. At a current

P7-4 Expected Return Ecolap Inc. (ECL) recently paid a $0.50 dividend. The dividend is expected to grow at a 12 percent rate. At a current stock price of $11.20, what is the return shareholders are expecting?

First convert D0to D1then use equation:

Expected return = i = D1 + g

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