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Homework answers / question archive / Redan, Inc
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.)
IR.Dar.fin r
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%.
