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Submitted by zliverpool on Sat, 2011-12-03 22:15

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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 06:28

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## complete solution with calculations

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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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