What Is the Required Rate of Return on a Share

question 38

Multiple Choice

What is the required rate of return on a share that is expected to pay a constant dividend of $4.50 in perpetuity and is priced at $47.50?

• A)10.31%
• B)7.98%
• C)11.43%
• D)9.47%

---

Definitions:

Mutual Agency

A principle in partnerships where each partner has the authority to bind the partnership to contracts within the scope of the business's operations.

Limited Life

A term that refers to the finite existence of a business entity or an asset's useful life.

Store Equipment

Assets such as shelving, registers, computers, and other machinery used in the operation of a retail store.

Accounts Payable

Short-term liabilities representing the amount a company owes to suppliers or creditors for goods and services received but not yet paid for.