What rate of return are investors expecting on stock

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Monmouth Utility Company is expected to pay dividends of $3.25 per share next year. The firm's dividends are expected to grow at a constant rate of 2.75% per year. The market price of the stock is $68.42 per share.

a. What rate of return are investors expecting on this stock?

b. You would be happy earning a 6% return on this stock. Should you buy it?

Reference no: EM132699460

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