Question
Eastern Electric currently pays a dividend of about $1.95 per share and sells for $32 a share. a.If investors believe the growth rate of dividends
Eastern Electric currently pays a dividend of about $1.95 per share and sells for $32 a share.
a.If investors believe the growth rate of dividends is 4% per year, what is the opportunity cost of capital? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Cost of Capital%
b.If investors' opportunity cost of capital is 12%, what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Growth rate%
c.If the sustainable growth rate is 4% and the plowback ratio is .2, what must be the return on equity ROE? (Round your answer to 2 decimal places.)ROE%
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