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Eastern Electric's recent annual dividend was $1.64 per share and its stock currently sells for about $27 per share. (Round your answers to 2 decimal
Eastern Electric's recent annual dividend was $1.64 per share and its stock currently sells for about $27 per share. (Round your answers to 2 decimal places.) a. If investors believe the growth rate of dividends is 3% per year, what rate of return do they expect to earn on the stock? Rate of return 9.26 b. If investors' required rate of return is 10%, what must be the growth rate they expect of the firm? Rate of return 3.7 X % c. If the sustainable growth rate is 5% and the plowback ratio is .4, what must be the rate of return earned by the firm on its new investments? Rate of return 12.5
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