year was $2.78 and is expected to be $3 at the end of this year, the current stock price is $60, and the growth rate for dividends is 8 percent. Using the Gordon approach, what is the expected return?

The expected return is 13%.

Explanation:

Note: Before answering the question, the full question is first stated as follows:

A firm's stock cash dividend per share for last year was $2.78 and is expected to be $3 at the end of this year, the current stock price is $60, and the growth rate for dividends is 8 percent. Using the Gordon approach, what is the expected return?

The answer to the explanation of the answer is now as follows:

Gordon’s theory which is also known as ‘Bird-in-the-hand’ theory states that the importing factor to consider in determining the value of a firm are the current dividends.

Therefore, the Gordon growth model (GGM) formula which assumes that there will a stable dividend growth rate year after year forever is employed for this question as follows:

P = d1 / (r – g) ……………………………………… (1)

Where;

P = current stock price = $60

d1 = next dividend = $3

r = expected return = ?

g = growth rate of dividend = 8%, or 0.08

Substituting the values into equation (1) and solve for r, we have:

60 = 3 / (r - 0.08)

60(r - 0.08) = 3

60r - 4.80 = 3

60r = 3 + 4.80

r = 7.80 / 60

r = 0.13, or 13%

Therefore, the expected return is 13%.

answer; i believe that the correct answer is ( owners investment)

ans.

heterothermic organisms include those organisms that can switch between homeothermic (having body temperature higher than environment) and poikilothermic (having variation in internal body temperature) strategies.

some migratory birds show heterothermy as they decrease their metabolic rate during cold nights to keep their body temperature low. drop in metabolic rate allows increase in production efficiency of birds that reduces the internal body temperature to make it equal to external cold temperature during cold nights.

thus, the correct answer is 'birds allow their temperature drop in order to increase their production efficiency.'