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27 June, 02:03

The stock price of Webber Co. is $68. Investors require an 11 percent rate of return on similar stocks.

Required: If the company plans to pay a dividend of $3.85 next year, what growth rate is expected for the company's stock price?

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  1. 27 June, 04:46
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    To get the growth rate, we will follow the Gordon Growth modelP = D / (K-G) whereP = stock value=$68D = Expected dividend=$3.85G = Growth rateK = required rate of returnG = K - (D/P) Substitute the given valuesG = 0.11 - (3.85/68)

    G = 5.34%The growth rate for stock required is 5.34%
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Home » Business » The stock price of Webber Co. is $68. Investors require an 11 percent rate of return on similar stocks. Required: If the company plans to pay a dividend of $3.85 next year, what growth rate is expected for the company's stock price?
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