A stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is a constant 10% and the company reinvests 40% of earnings in the firm, what must be the discount rate? (Do not round intermediate calculations. Enter your answer as a whole percent.) Discount rate?

a.

If investors believe the growth rate of dividends is 4% per year, what rate of return do they expect to earn on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Rate of return%

b.	If investors' required rate of return is 10%, what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Growth rate%

c.	If the sustainable growth rate is 5% and the plowback ratio is .5, what must be the rate of return earned by the firm on its new investments? Rate of Return%