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elk city utility recently paid a dividend of $3.73 per share. dividends are expected to grow at a rate of 3.60%. elk city stock currently sells for $37.95 per share. if you were on the utility regulatory commission, what rate of return would you allow elk city to earn? (round your answer to 2 decimal places.)

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The rate of return that Elk City Utility should earn, given the dividends and the stock price is 13. 78%

How to find the rate of return?

When given the dividends, the growth rate of the dividends, the selling price of the stock, you can find the rate of return by using the Dividend Discount model which is:

Price of stock = Next dividend / ( Rate of return - Growth rate )

The next dividend is:

= Current dividend x ( 1 + dividend growth rate)

= 3. 73 x ( 1 + 3.60 %)

= $3. 86428

The rate of return is:
37. 95 = 3. 86428 / ( Rate of return - 3. 60%)

( Rate of return - 3. 60%)  x 37. 95 = 3. 86428

Rate of return = 3. 86428 / 37. 95 +  3. 60%

Rate of return = 13. 78%

Find out more on the rate of return at https://brainly.com/question/28199724

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