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?
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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
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