Company Z’s earnings and dividends per share are expected to grow indefinitely
January 14th, 2018
Consider three investors:a. Mr. Single invests for one year.b. Ms. Double invests for two years.c. Mrs. Triple invests for three years.Company Z’s earnings and dividends per share are expected to grow indefinitely by 5% a year, the next year’s dividend is $10 and the market capitalization rate is 8%.Assume each invests in company Z, what is the expected rate of return? (Do not round intermediate calculations. Round your answers to 2 decimal places.)