If Pepperdine, Inc's return on equity is 14 percent and the management plans to retain 55 percent of earnings for investment purposes. what will be the firm's growth rate? (Round to two decimal places) The firm's growth rate will be % (Common stock valuation) The common stock of NCP paid $1.29 in dividends last year. Dividends are expected to grow at an annual rate of 6.00 percent for an indefinite number of years. (Round to the nearest cent) If your required rate of return is 8.70 percent, the value of the stock for you is: You (should/should not) make the investment if your expected value of the stock is (greater/less) than the current market price because the stock would be undervalued. (Measuring growth) Given that a firm's return on equity is 22 percent and management plans to retain 37 percent of earnings for investment purposes. what will be the firm's growth rate? If the firm decides to increase its retention rate, what will happen to the value of its common stock? (Round to two decimal places.) The firm's growth rate will be: If the firm decides to increase its retention ratio, what will happen to the value of its common stock? An increase in the retention rate will (increase/decrease) the rate of growth in dividends, which in turn will (increase/decrease) the value of the common stock. (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: the investor's required rate of return is 13 percent the expected level of earnings at the end of this year (E_1) is $8. the firm follows a policy of retaining 40 percent of its earnings the return on equity (ROE) is 15 percent, and similar shares of stock sell at multiples of 8.571 times earnings per share Now show that you get the same answer using the discounted dividend model. (Round to the nearest cent)