The common stock of Dayton Repair sells for $50 a share. The stock is expected to pay $2.28 per share next year when the annual dividend is distributed. The firm has established a pattern of increasing its dividends by 5.0 percent annually and expects to continue doing so. What is the market rate of return on this stock

r = 0.0956 or 9.56%

Explanation:

Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D1 / (1+g)

Where,

By plugging in the available values for P0, D1 and g, we can calculate the required rate of return (r) to be,

50 = 2.28 / (r - 0.05)

50 * (r - 0.05) = 2.28

50r - 2.5 = 2.28

50r = 2.28 + 2.5

r = 4.78 / 50

r = 0.0956 or 9.56%

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi