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1)Here are data on two stocks, investor required return is 15 percent: Stock A Return on Equity 12% Earnings Per Share $2.00 Dividends per share

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

Stock A

Return on Equity 12%

Earnings Per Share $2.00

Dividends per share $1.00

Stock B

Return on Equity 10%

Earnings Per Share $1.50

Dividends per share $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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