Demanding on the companys stock

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Question: Storico Company just paid a dividend of $2.20 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $42.75, what required return must investors be demanding on the company's stock?

Reference no: EM133430621

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