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Determining the expected rate of return on the stock

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Reference no: EM131086490

Steady As She Goes, Inc., will pay a year-end dividend of $2.60 per share. Investors expect the dividend to grow at a rate of 6% indefinitely.

A. If the stock currently sells for $26 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 18.5%, what is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131086490

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