ALL ONE QUESTION

Questions (1-2) are based on the information that follows. Net earnings for a constant dividend growth firm are currently $80 million and expected to grow forever at 12.5%. The firm has a policy ot paying out a constant 40% of earnings as dividends. Shares outstanding are 8 million. Ru 15% and Rus = 5%. The firm's cost of capital is 17.5% and is expected to be unchanged for the indefinite future. 2. What should be the expected dividend yield on the stock? 12.5% 16 30.0% Id 25.5% 50% 18.5% O 04