What is the expected rate of return on the stock

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Reference no: EM131992794

Steady As She Goes Inc. will pay a year-end dividend of $4.00 per share. Investors expect the dividend to grow at a rate of 5% indefinitely.

a. If the stock currently sells for $40.00 per share, what is the expected rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a whole percent.)

b. If the expected rate of return on the stock is 17.50%, what is the stock price? (Do not round intermediate calculations.)

Reference no: EM131992794

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