Share Values Your manager has obtained the following information on comparable stocks A and B, both of which are estimated to have a discount rate of 15 per cent:

Stock A Stock B Return on equity 15% 10%

Earnings per share £2.00 £1.50 Dividends per share £ 1.00 £1.00 Calculate the dividend payout ratios for each firm, the expected dividend growth rates for each firm and the ‘true’ stock price for each firm.