The next dividend payment by Grenier, Inc., will be $1.40 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $25 per share, what is the required return

Required Rate of return is 11.6%

Explanation:

Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.

As we have the value of the share, we need to calculate the required return rate using following formula.

As the dividend is also given for the next period so we don't need to grow it.

Value of Share = Dividend / (Rate of return - Growth rate)

$25 = $1.40 / ( r - 6% )

r - 0.06 = $1.40 / $25

r - 0.06 = $1.40 / $25

r - 0.06 = 0.056

r = 0.056 + 0.06

r = 0.116

r = 11.6%

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.