Simple Math, Help

So, this makes me feel pretty stupid, but whatever… I’m trying to learn the dividend discount model and I’m struggling with some pretty basic algebra here. I attached a study question as an example.

How did they solve for the required rate of return? Specifically where the heck does the -.70 come from?

I know this is fucking 9th grade level stuff here…

Thanks,
Chris

They multiplied both sides by (x - .05)

.05 x 14 is .7

[quote]LoRez wrote:
They multiplied both sides by (x - .05)

.05 x 14 is .7[/quote]

Wow…

Thanks man!

I’m just gonna delete my account now…

It’s ok, getting old happens to the best of us.

[quote]usmccds423 wrote:
I’m just gonna delete my account now…[/quote]

I just found out Aaron Lewis went country…

2.10/(x-1/20) = 14 becomes…
14*(x-1/20) = 2.10 distribute the 14…
14x-7/10 = 2.1 …
14x = 7/10+2.1 = 7/10 + 21/10 = 28/10 = 2.8
x = whatever since I don’t have a calculator.

The explanation they give is kind of crappy so don’t feel bad.

[quote]countingbeans wrote:

[quote]usmccds423 wrote:
I’m just gonna delete my account now…[/quote]

I just found out Aaron Lewis went country…