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I need B. Eastern Electric currently pays a dividend of $1.78 per share and sells for $39 a share. a. If investors believe the growth
I need B.
Eastern Electric currently pays a dividend of $1.78 per share and sells for $39 a share. a. If investors believe the growth rate of dividends is 4% per year, what rate of return do they expect to earn on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return 8.67% b. If investors' required rate of return is 15%, what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Growth rate 10.18% c. If the sustainable growth rate is 2% and the plowback ratio is 0.1, what must be the rate of return earned by the firm on its new investments? (Enter your answer as a percent rounded to 2 decimal places.) Rate of return 20.00%Step by Step Solution
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