Required return must investors be demanding on storico stock

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Reference no: EM131853638

Storico Co. just paid a dividend of $1.95 per share. The company will increase its dividend by 24 percert next year and will then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $40.95, what required return must investors be demanding on Storico stock? (Hint: Set up the valuation formula with all the relevant cash flows, and use trial and error to find the unknown rate of return.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Required return

Reference no: EM131853638

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