(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 (E7) is $8, the retention ratio is 55 percent, the return on equity (ROE) is 18 percent (that is, it can earn 18 percent on reinvested earnings), and similar shares of stock sell at multiples of 7.378 times earnings per share. a. What is the expected growth rate for dividends? [% (Round to two decimal places.) b. What is the price earnings ratio (PIE,)? (Round to three decimal places.) c. What is the stock price using the P/E ratio valuation method? $ (Round to the nearest cent.) d. What is the stock price using the dividend discount model? $ (Round to the nearest cent.) e. Using the dividend discount model, what would be the stock price if the firm could earn 23% on reinvested earnings (ROE)? $ (Round to the nearest cent.) What would be the P/E ratio (PIE1) if the firm could earn 23% on reinvested earnings (ROE)? (Round to three decimal places.) f. What does this tell you about the relationship between the rate the firm can earn on reinvested earnings and P/E ratios? (Select from the drop-down menus.) The higher the ROE, other things being the same, the the value of the common stock and thus the the price earnings ratio, P/E. (Preferred stock valuation) Pioneer's preferred stock is selling for $19 in the market and pays a $2.10 annual dividend. a. If the market's required yield is 13 percent, what is the value of the stock for that investor? b. Should the investor acquire the stock? a. The value of the stock for that investor is $per share. (Round to the nearest cent.) b. Should the investor acquire the stock? (Select from the drop-down menus.) The investor acquire the stock because it is currently overpricedin the market. should underpriced should not