he next dividend payment by hoffman, inc., will be $3.40 per share. the dividends are anticipated to maintain a growth rate of 2.25 percent forever. if the stock currently sells for $50.40 per share, what is the required return?

The required return can be calculated with the use of Gordon's Dividend Growth Model. The formula for calculating required return as per this model is:

Required Return = D1/Current Stock Price + Growth Rate

Here, D1 = $3.40, Current Stock Price = $50.40 and Growth Rate = 2.25%

Using these values in the above formula, we get,

Required Return = 3.40/50.40 + 2.25% = 8.99% to 9% (answer)

The Gordon Growth Model (GGM) expects that an organization exists perpetually and that there is a consistent development in profits while esteeming an organization's stock. The GGM works by taking a limitless series of profits per share and limiting them back into the current utilizing the necessary pace of return.

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