Estimating expected rate of return on the stock

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Reference no: EM1373115

Computing expected rate of return, required rate of return on a stock. Assume Walmart stock currently sells for $30 per share. The stock just paid a dividend of $0.75 per share.
The dividend is expected to grow at a constant rate of 10% a year. The risk-free return is 3%
and the market risk premium is 8% . The stock has a beta of 1.2 .

A. What is the expected rate of return on the stock?

B. What is the required rate of return on the stock?

C. Will the stock price increase or decrease.

Reference no: EM1373115

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