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The next dividend payment by Hoffman, Inc., will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 4.5 percent forever. If the stock currently sells for $43.15 per share, what is the required return

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Ritmeks

Answer:

10.6%

Explanation:

The next dividend payment for Hoffman is $2.65

The growth rate is 4.5%

The stock currently sells at $43.15

The required return can be calculated as follows

= 2.65/43.15 + 4.5/100

= 0.0614 + 0.045

= 0.1064× 100

= 10.6%

Hence the required return is 10.6%

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