(Common stock valuation) Assume the following: - the investor's required rate of return is 17 percent, - the expected lovol of eamings at the end of this yoar (E1) is $9, - the retention ratio is 40 percent. - the seturn on equity (ROE) is 16 percent (that is, it can earn 16 percent on reinvested earnings), and - similar shares of stock sell at multples of 5.660 times earings per share. Questions B. Determine the expected growth rate for dividends. b. Detetmine the price earnings rato (PEE- ). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the eividend discount model? e. What would happen to the PVE ra5o (PIEq) and slock price if the ferm could eam 21 percent on reirvested earnngs (ROC)? 1. What does this tel you about the relaticnship tetween the rate the firm can earn on reimested earnings and BE ratios? a. What is the expected growth rate for dividends? 6. (Round to two decimal places ) (Related to Creckpoint 10.3) (Preferred stock valuation) Calculate the value of a preferred atock that pays a dividond of $7.00 per share when the mackers requred yield on similar shares is 9 percent The value of the prefered stock is? per ahare. (Feynd to the noareat cent) (Proterred stock valuation) You own 200 shares of Somner Revources' prelerted stock, which currenty sels for $40 per share and payn annual dividends of $3.40 per share. it the makehs required yield on simiar shares is 10 poreent, should you sell your shares or bay more? a. The value of the stock to you is? per share. (Round to the nearest cent)