0Sun 529 PM tuskegee blackboard com Remaining Time 37 minute

0Sun 5.29 PM tuskegee blackboard com Remaining Time: 37 minutes, 37 seconds Question Completion Status Question Completion Moving to anther quention will save this respons 10 points Save Anes rankiin corporation is expectes to pay a dividend of $1.25 per sbare at se end or ehe year. The atock sel1a for s40.00 per share, and owth eate reqaired a The dividond L expected to grow one conatant cate, 9 forever Wha: is the eqi expectod 0.

Solution

Stock price = next dividend payment/(required rate of return - g)

40 = 1.25/(.105 - g)

g = 7.375%