Explain the dividend growth model in detail

Reference no: EM131966108

Question: Delso Company's stock has a price of $53 and the firm expects to issue a dividend of 0.77 next year (at t = 1). It has a beta of 1.9, the risk-free rate is 2.28%, and the market risk premium is estimated to be 5%. Using all this information, tell me the rate Delso's dividends need to grow for the CAPM and the dividend growth model to give the same required retun to equity. Answer in percent form (to two decimal places). Omit the percent sign.

Reference no: EM131966108

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