The Current Dividend Yield, Which Is the Recent Dividend Divided

Question 78
Multiple Choice

The current dividend yield, which is the recent dividend divided by the current stock price, on common stock of Formosan Freedom Co. is 4.8 %. The company just paid a $2.10 dividend. The dividend will be $2.205 in next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on stock of Formosan Freedom Co.? A) 10.04 percent B) 16.07 percent C) 21.88 percent D) 43.75 percent