5 PleaseHelpMe Inc PHM is expected to maintain a constant 4

5. PleaseHelpMe, Inc. (PHM) is expected to maintain a constant 4% growth rate in its dividends indefinitely. If the company has a dividend yield of 6%, what is the required return on the company’s stock?

Solution

the required return on the company’s stock = 4% + 6%

the required return on the company’s stock = 10%