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Managed Healthcare’s current stock price is $25, its next per share dividend (assumed to be paid
annually) is forecasted to be $1.00, and analysts expect the company to grow at a constant annual
rate of 10 percent. What is the stock’s expected rate of return?A15.0 percent
Solution
expected rate of return=(D1/Current price)+Growth rate
=(1/25)+0.10
which is equal to
=14%

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Managed Healthcare’s current stock price is $25, its next per share .pdf

  • 1. Managed Healthcare’s current stock price is $25, its next per share dividend (assumed to be paid annually) is forecasted to be $1.00, and analysts expect the company to grow at a constant annual rate of 10 percent. What is the stock’s expected rate of return?A15.0 percent Solution expected rate of return=(D1/Current price)+Growth rate =(1/25)+0.10 which is equal to =14%