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Ecology Labs Inc. will pay a dividend of $6.50 per share in the next 12 months (D_1). The required rate of return (K_e) is 20
Ecology Labs Inc. will pay a dividend of $6.50 per share in the next 12 months (D_1). The required rate of return (K_e) is 20 percent and the constant growth rate is percent. (Each question is independent of the others.) a. Compute the price of Ecology Labs' common stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. Assume K_e, the required rate of return, goes up to 24 percent. What will be the new price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) New price c. Assume the growth rate (g) goes up to 13 percent. What will be the new price? K_e goes back to its original value of 20 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) New price d. Assume D_1 is $7.50. What will be the new price? Assume K_e is at its original value of 20 percent and g goes back to its original value of 9 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) New price
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