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31 December, 13:28

Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $2.25 at the end of the year. Its dividend is expected to grow at a constant rate of 6.50% per year. If Walter's stock currently trades for $20.00 per share, what is the expected rate of return? 734.38% 17.75% 1,385.00% 660.56%

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  1. 31 December, 17:05
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    The expected rate of return is 17.75%

    Explanation:

    In order to calculate the expected rate of return we would have to calculate the following formula according to the given dа ta:

    expected rate of return = (expected dividend/price) + growth

    expected rate of return = ($2.25/$20) + 6.50%

    expected rate of return=0.1125+0.0650

    expected rate of return=0.1775

    expected rate of return=17.75%

    The expected rate of return is 17.75%
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Home » Business » Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $2.25 at the end of the year. Its dividend is expected to grow at a constant rate of 6.50% per year. If Walter's stock currently trades for $20.
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