00:01
Hello students, we are given a question with sissippian companies.
00:03
Common stock is currently trading for $25 .25 per share.
00:09
The stock is expected to pay a $2 .4 dividend at the end of the year.
00:15
Students and the sisypian company's equity cost of capital is given as 14%.
00:22
If the dividend payout rate is expected to remain constant, then the expected growth rate in the sisypian company's company.
00:30
Company's earnings is closest to okay students so here we are supposed to note that we should apply a formula directly that p zero is equal to dividend okay student by r e minus g okay students so now what we need to do p zero here we can just write our what we need to write our per share current trading value of per share okay so which is given as 25 25 25 25 dollar per share okay so is equals to dividend.
01:03
So here we are given it as a $2 .4.
01:07
So we can write here 2 .4 and divided by r .e, which we are given equity cost of capital is given as 14 percentage.
01:17
It means 0 .14 students minus g.
01:21
Now we need to calculate g by calculation.
01:25
So here, how we will calculate it? we can just write it as 0 .14 minus g is equal to okay students 2 .4 divided by 25 .25.
01:38
So 0 .14 minus g comes out as equals to 2 .4 divided by here 25 .25...