Historical dividends are $1.01 for 2005; $1.07 for 2006; $1.12 for 2007; $1.31 for 2008; $1.45 for 2009; and $2.30 for 2010; What is the required rate of return for this stock assuming the future dividend growth rate will remains the same and the company has an infinite horizon. Assume the jan 1, 2011 price of stock was $45. What was the required return for the stock? What was the estimated annual required return for the stock?
Can anyone help me understand how to calculate this? Thank You!!
