GRITO stock is currently selling for $46.10 a share. If the company is expected to pay a dividend of $5.60 a year from now and dividends are

GRITO stock is currently selling for $46.10 a share. If the company is expected to pay a dividend of $5.60 a year from now and dividends are not expected to grow thereafter, what is the market capitalization rate (or, required rate of return) for a share of GRITO stock?
a. 7.56%
b. 8.23%
c. 10.50%
d. 12.15%

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  1. Answer:

    d. 12.15%

    Explanation:

    The computation of the market capitalization rate is shown below:

    As we know that

    Market capitalization rate = Expected dividend ÷ current price

    = $5.60 ÷ $46.10

    =  12.15%

    Hence, the market capitalization rate is 12.15%

    Therefore the correct option is d. 12.15%

    We simply applied the above formula so that the correct value could come

    And, the same is to be considered

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