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The common stock of Sweet Treats is selling for $54.65 per share. The company is expected to have an annual dividend increase of 3.7 percent indefinitely and pay a dividend of $4.30 in one year. What is the total return on this stock

Respuesta :

Answer:

11.66%

Explanation:

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

54.05 = 4.3/ (r - 0.037)

4.3 / 54.05 = r - 0.037

11.66 = r