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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 386 times
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complete solution with calculations

body preview (21 words)

xxxxxxx xxxxx x xxxx xxxxxxxx / xxxxxxx

xx

32.50 = $1(1+g) x (0.12 x xxxx

xxxxx = x x g x xxxx - g...rearrange.... 

xxxxxxxxxx x xx x 1 + g 

3.9 x 32.50g = x + xxx

2.9 = xxxxxxxx

x x 0.08657 

xx xxxxx


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Answer
Submitted by Asma on Tue, 2011-12-06 09:47
teacher rated 374 times
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Answer

body preview (14 words)

xxxxxx xxxx = return x dividend /price

g x k x D1 xx

= xxxx - xx / $32.50

x xxxx - xxxxxx

=0.08923 xx xxxxx


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