Business & Finance Homework Help – 4 Problems| Business & Finance homework help
You can calculate the required return for an investment with $2.50 in expected dividends, $19 as a price and 6% annual growth using this formula:
Dividend Yield divided by (capital gain Yield multiplied by growth rate) = Required Rate Of Return
Dividend Yield = 2.50/19 = 0.1316
Capital Gain Yield = (2.50 – 19.50 = 0.8684
Needed Rate of Return = 0.1316 + (0.8684 by 0.06)
0.15% = 0.1563