alleryStart learning →Last dividend Rs 2, growth 10 percent, price Rs 55. What required return does Gordon imply?
A4%
B13.6%
C10%
D14%
Answer & Solution
Correct answer: D. 14%
Next dividend is 2 x 1.10 = 2.20; 2.20 / 55 = 4%, and adding growth of 10% gives 14%.
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