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Ecology Labs lnc., will pay a dividend of $6.40 per share in the next 12 months (D1). The required rate of return (Ke) is 14
Ecology Labs lnc., will pay a dividend of $6.40 per share in the next 12 months (D1). The required rate of return (Ke) is 14 percent and the constant growth rate is 5 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.) b. Assume Ke, the required rate of return, goes up to 18 percent. what will be the new price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Assume the growth rate (g) goes up to 9 percent what will be the new price? Ke goes back to its original value of 14 percent (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Assume D1 is $7.00. what will be the new price? Assume Ke is at its original value of 14 percent and g goes back to its original value of 5 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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