Question
Given the information below, Stock A Stock B Return on Equity 15% 10% Earnings per share R2 R1.50 Dividend per share R1 R1 Answer the
Given the information below,
| Stock A | Stock B | |
| Return on Equity | 15% | 10% |
| Earnings per share | R2 | R1.50 |
| Dividend per share | R1 | R1 |
Answer the following:
a. What are the dividend pay-out ratios for each firm?
b. What are the expected dividend growth rates for each stock?
c. If investors require a return of 15% on each stock, what are their values?
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Accounting Principles
Authors: Jerry J Weygandt
10th Edition
1118009282, 9781118009284
