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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xxxxxxx xxxxx x xxxx xxxxxxxx / xxxxxxx
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
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