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1)Here are data on two stocks, investor required return is 15 percent: Stock A Stock B Return on Equity Earnings Per Share Dividends per share

1)Here are data on two stocks, investor required return is 15 percent:

Stock A

Stock B

Return on Equity

Earnings Per Share

Dividends per share

12%

$2.00

$1.00

10%

$1.50

$1.00

a. What are the dividend payout ratios for each firm?

b. What are the expected dividend growth rates for each firm?

c. What is the proper stock price for each firm?

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