Redan, Inc

Finance May 02, 2021

Redan, Inc., is expected to maintain a constant 5.65 percent growth rate in its dividends, indefinitely.
If the company has a dividend yield of 415 percent, what is the required return on the company's stock, (Do not round Interm.la..lculations a. enter your answer as a percent .dd.2 decimal places, e.g., 32.16.)
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Expert Solution

Computation of Required Rate of Return:

Required return on stock = Dividend yield+Capital gains yield

= 4.15%+5.65%

= 9.80%

Hence, the required return on the stock is 9.80%.

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