The common stock of Cranberry, Inc. is selling for $26.75 on the open market. A dividend of $3.68 is expected to be distributed, and the growth rate of this company is estimated to be 5.5%
If Richard Dean, an average investor, is considering purchasing this stock at the market price, what is his expected rate of return?
Answer:
R = (D/V) + g
R = ($3.68/$26.75) + .055
R = 19.26%
Business
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