Answer:
The dividend yield is 3.44%
Step-by-step explanation:
Consider the provided information.
the price of Slippery Rock stock has been increasing at a rate of 8.21 percent a year.
That means the growth rate is 8.21% or 0.0821
The stock is priced at $43.40 a share and has a required return of 11.65 percent.
That means the value of required return is 11.65% or 0.1165
Substitute the respective values in the formula shown below:
Required return = Dividend yield + growth rate
0.1165 = Dividend yield + 0.0821
Dividend yield = 0.1165 - 0.0821
Dividend yield = 0.0344 or 3.44%
Therefore, the dividend yield is 3.44%
