Finance

McCracken Roofing, Inc., common stock paid a dividend of $1.28 per share last year. The company expects earnings and dividends to grow at a rate of 7% per year for the foreseeable future.

a) What required rate of return for this stock would result in a price per share of $20?

b) If McCracken expects both earnings and dividends to grow at an annual rate of 12% what required rate of return would result in a price per share of $20?