General Cereal common stock dividends was $0.79 in 2000 and the last dividend paid was $1.55 per share in 2010. Dividends are expected to continue growing at the historic rate for the foreseeable future.

Question

General Cereal common stock dividends was $0.79 in 2000 and the last dividend paid was $1.55 per share in 2010.  Dividends are expected to continue growing at the historic rate for the foreseeable future.

What is the General Cereal’s current value of a share of this stock to an investor who requires a 12 percent rate of return ?(5)

Ms. Sue · Answer

What is the current share price of General Cereal? However, it's highly unlikely that it will provide a 12% annual return.

Teresa · Answer

MS. SUE, THE CURRENT SHARE PRICE WAS NOT GIVEN!

Ms. Sue · Answer

The rate of return is based on the price the shareholder pays for the stock. Please check with your teacher to see what is expected.