A firm pays a $1.50 dividend at the end of year one. It has a share price of $60 (Pa constant growth rate (g) of 8 percent. . Compute the required (expected) rate of return (K) (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Required rate of return Also indicate whether each of the following changes would make the required rate of return (K) go up or down. (In each question below, assume only one variable changes at a time. No actual numbers are necessary) b. If the dividend payment increases, Oke will go up. O ke will go down O Ke remains constant. c. If the expected growth rate increases; O ke will go up. O Ke will go down O Ke remains constant. d. If the stock price increases; O ke will go up. O Ke will go down. O Ke remains constant.

A firm pays a $1.50 dividend at the end of year one. It has a share price of $60 (Pa constant growth rate (g) of 8 percent. . Compute the required (expected) rate of return (K) (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Required rate of return Also indicate whether each of the following changes would make the required rate of return (K) go up or down. (In each question below, assume only one variable changes at a time. No actual numbers are necessary) b. If the dividend payment increases, Oke will go up. O ke will go down O Ke remains constant. c. If the expected growth rate increases; O ke will go up. O Ke will go down O Ke remains constant. d. If the stock price increases; O ke will go up. O Ke will go down. O Ke remains constant.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 10P

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