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Question
Submitted by zliverpool on Sat, 2011-12-03 23:15
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Bates Inc. pays a dividend of $1 and is currently selling for $32.50. If investors require a 12 % return on their investment from buying Bates stock, what growth rate would Bates Inc. have to provide the investors?

Answer
Submitted by shahimermaid on Tue, 2013-12-24 07:28
teacher rated 378 times
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complete solution with calculations

body preview (31 words)

present price = next xxxxxxxx x xxxxxxx

 

xxxxx x $1(1+g) / (0.12 x g) 

32.50 = 1 + g / 0.12 - g...rearrange.... 

xxxxxxxxxx - g) x 1 + xxx

3.9 x 32.50g x 1 x g 

xxx x xxxxxxxx

x x xxxxxxxxx

g= 8.66%


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Answer
Submitted by Asma on Tue, 2011-12-06 09:47
teacher rated 309 times
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Answer

body preview (22 words)

xxxxxx Rate x return x dividend /price
g x k x xx xx

x xxxx x $1 x $32.50
x 0.12 - 0.0308

xxxxxxxx or xxxxx


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