D Question 11 5 pts Retractable Tec expected return lust aid

D Question 11 5 pts Retractable Tec expected return? lust aid div end of Do-S260 and sells for S40 per share. If the company has a constant growth rate of 6% per year, what is their total Your answer should be between 7.80 and 17.20, rounded to 2 decimal places, with no special characters

Solution

stock price = D0 * (1 +g)/(r - g)

where D0 = 2.6

g = .06

stock price = $40

40 = 2.6*1.06/(r - .06)

r = 12.89