Question
A) A firm is expected to have earnings next year of $5.21 per share and the firm is expected to pay a dividend of $3.13.
A) A firm is expected to have earnings next year of $5.21 per share and the firm is expected to pay a dividend of $3.13. Investors' required rate of return is 10%. If the sustainable growth rate is 6%, what must be the rate of return earned by the firm on its new investments? Enter your answer as a percentage. Do not include the percentage sign in your answer.
Enter your response belowrounded to2 DECIMAL PLACES.
B)Blueberry Co. has a stock that has a current price of $49.58. A year from now, the stock is expected to pay a dividend of $3.95 and the price will be $49.79. What is the expected rate of return for this stock? Enter your answer as a percentage. Do not include the percentage sign in your answer.
Enter your response below rounded to 2 DECIMAL PLACES.
C)Fortress of Solitude Co. expects an earnings per share of $1.89 and reinvests 35% of its earnings. Management projects a rate of return of 10% on new projects and investors expect a 10% rate of return on the stock. What is the sustainable growth rate? Enter your answer as a percentage. Do not include the percentage sign in your answer.
Enter your response belowrounded to2 DECIMAL PLACES.
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