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Ecology Labs Incorporated will pay a dividend of $3.90 per share in the next 12 months (D1). The required rate of return (Ke) is 22
Ecology Labs Incorporated will pay a dividend of $3.90 per share in the next 12 months (D1). The required rate of return (Ke) is 22 percent and the constant growth rate is 10 percent. Note: Each question is independent of the others. a. Compute the price of Ecology Labs' common stock. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Price b. Assume e, the required rate of return, goes up to 25 percent. What will be the new price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. Assume the growth rate (g) goes up to 14 percent. What will be the new price? e goes back to its original value of 22 percent. Note: Do not round intermediate calculations. Round your answer to 2 decimal places
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