Business Finance Homework: Chapter 10 Homework Score: 0.38 of 1 pt 7 of 9 (9 completa) P10-14 (similar to) (Common stock valuation) Assume the following: . the investor's required rate of return is 16 percent, the expected level of earnings at the end of this year (E) is $7. the retention ratio is 55 percent the return on equity (ROE) is 17 percent that is, it can eam 17 percent on reinvested carings), and similar shares of stock sell at multiples of 6.767 times earnings per share. Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (PE) c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? a. What is the expected growth rate for dividends? % (Round to two decimal places) Enter your answer in the answer box and then click Check Answer 6 parts remaining Clear All MacBook so F3 DOD F4 F2 57 F5 A @ $ 4 2 3 5 6 7 Q W E R Y Business Finance Homework: Chapter 10 Homework Score: 0.38 of 1 pt 7 of 9 (9 complete) P10-14 (similar to) Wwwwww . the expected level of earnings at the end of this year (E) is $7. the retention ratio is 55 percent, . the return on equity (ROE) is 17 percent (that is, it can earn 17 percent on reinvested earnings), and similar shares of stock sell at multiples of 6.767 times earings per share Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (PE) c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? e. What would happen to the PlE ratio (PE) and stock price if the firm could eam 22 percent on reinvested eamings (ROE)? 1. What does this tell you about the relationship between the rate the firm can eam on reinvested carings and P/E ratios? a. What is the expected growth rate for dividends? % (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer 6 parts remaining Clear All FT F2 Fa 15 F6 1 @ & 2 3 4 5 6 7 Q W E R T Y