Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and the Yahoo Answers website is now in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Common stock valuation. 10 points?
You intend to purchase Marigo common stock at $50 per share, hold it for 1 year and then sell it after a dividend of $6 is paid. How much will the stock price have to appreciate for you to satisfy your required rate of return of 15%?
2 Answers
- CocoLv 77 years agoFavorite Answer
15% = $6 / $50 + growth rate
Growth rate= 15% - ($6 / $50) = 5%.
5% growth on $50 per share stock over 1 year = $2.50
- Rigal TLv 67 years ago
Ignoring the interim, including the ex-dividend date, at least 3% or $1.50, if they're asking this from a math perceptive. ie if this is for an entry level course, Managerial Finance something like that.
Have to hold it a year and a day for the lower tax rate. I know it doesn't matter for your textbook problem, just saying.
