What is Constant Growth Rate and gL

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Reference no: EM132005992

Constant Growth Rate, gL

A stock is trading at $60 per share. The stock is expected to have a year-end dividend of $5 per share (D1 = $5), and it is expected to grow at some constant rate gL throughout time. The stock's required rate of return is 12% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL? Round the answer to three decimal places. %

Reference no: EM132005992

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