Problemstorico co just paid a dividend of 165 per share the, Ask an Expert

Accounting

Problem:

Storico Co. just paid a dividend of $1.65 per share. The company will increase its dividend by 24 percent next year and will then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent dividend growth, after which the company will keep a constant growth rate forever.

Requirement:

Question: If the stock price is $42.54, what required return must investors be demanding on Storico stock?

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166450

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