Problem 7-15 Constant-Growth Model (LO2) A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is a constant 10% and the company reinvests a constant 40% of earnings in the firm, what must be the discount rate? Note: Do not round your intermediate calculations. Enter your answer as a whole percent. Discount rate %

Problem 7-15 Constant-Growth Model (LO2) A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is a constant 10% and the company reinvests a constant 40% of earnings in the firm, what must be the discount rate? Note: Do not round your intermediate calculations. Enter your answer as a whole percent. Discount rate %

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 6DQ

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