Question

beaver creek corporation stock is currently selling for $58.00. it is expected to pay a dividend of $5.00 at the end of the year. dividends are expected to grow at a constant rate of 7.5% indefinitely. compute the required rate of return on beaver creek corporation stock. group of answer choices 13.64% 12.48% 15.65% 16.12%

Answer 1

The required rate of return on beaver creek corporation stock will be 16.12%

The minimal profit (return) an investor will seek or expect in exchange for taking on the risk of investing in a stock or other type of security is known as the required rate of return (RRR).

RRR can also be used to determine a project's potential profitability in relation to its funding costs. RRR denotes the degree of risk associated with committing to a particular project or investment. The level of risk increases as return increases.

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