Eastern Electric currently pays a dividend of about $1.95 pershare and sells for $32 a share.

a.	If investors believe the growth rate of dividends is 4% peryear, what rate of return do they expect to earn on the stock?(Do not round intermediate calculations. Enter your answeras a percent rounded to 2 decimal places.)

Rate of return

%

b.	If investors' required rate of return is 12%, what must be thegrowth rate they expect of the firm? (Do not roundintermediate calculations. Enter your answer as a percent roundedto 2 decimal places.)

Growth rate

%

c.	If the sustainable growth rate is 4% and the plowback ratio is.2, what must be the rate of return earned by the firm on its newinvestments? (Enter your answer as a percent rounded to 2decimal places.)

Rate of return

%