The next dividend for both firms stocks

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Vince owns one share of stock of Blue Eagle Media and one share of stock of Red Royal Entertainment. The total value of his holdings is 194.95 dollars. Both stocks pay annual dividends that are expected to continue forever. The expected return for Blue Eagle Media stock is 15.9 percent and its annual dividend is expected to remain at 9.92 dollars forever. What is the expected return for Red Royal Entertainment stock if its next dividend is expected to be 13.76 dollars and all subsequent dividends are expected to grow by 3.78 percent annually? The next dividend for both firms’ stocks will be paid in one year. Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Reference no: EM132010425

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