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Expected rate of return on the stock-steady as she goes inc

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Reference no: EM132689527

Steady As She Goes, Inc., will pay a year-end dividend of $4.00 per share. Investors expect the dividend to grow at a rate of 5% indefinitely.

a. If the stock currently sells for $40 per share, what is the expected rate of return on the stock? (Do not round intermediate calculations.)

b. If the expected rate of return on the stock is 17.5%, what is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM132689527

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