What is the dividend growth rate investors expect

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Last year A1 Bank paid an annual dividend of $7 per share. The bank expects the growth of its dividends to be stable at 2% per year going forward.

Question 1: If investors require an 8% return, what is the current value of A1 Bank's stock? (round to nearest cent) = $119.00

Question 2: If the stock currently trades at $124.55 per share, what is the dividend growth rate investors expect? (round to nearest percent) Hint: When the constant-growth formula is solved for the growth variable, it becomes: g = -D/P + r

Reference no: EM133325594

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