1.Choi Pharmaceuticals currently plows back 40% of its earnings and earns a return of 20% on this investment. The dividend yield on this stock is 4%. Assuming that the company can continue to plow back this proportion of earnings and earn a 20% return on investment, how rapidly will earnings and dividends grow?

2.What is the expected return on Choi Pharmaceuticals?

Hint: r = dividend yield + growth rate