Question

GRITO stock is currently selling for $46.10 a share. If the company is expected to pay a dividend of $5.60 a year from now and dividends are not expected to grow thereafter, what is the market capitalization rate (or, required rate of return) for a share of GRITO stock?
a. 7.56%
b. 8.23%
c. 10.50%
d. 12.15%

Answer 1

Answer:

d. 12.15%

Explanation:

The computation of the market capitalization rate is shown below:

As we know that

Market capitalization rate = Expected dividend ÷ current price

= $5.60 ÷ $46.10

=  12.15%

Hence, the market capitalization rate is 12.15%

Therefore the correct option is d. 12.15%

We simply applied the above formula so that the correct value could come

And, the same is to be considered