Question
Problem 10-17 Calculation of g and EPS Sidman Products' common stock currently sells for $66 a share. The firm is expected to earn $5.94 per
Problem 10-17 Calculation of g and EPS
Sidman Products' common stock currently sells for $66 a share. The firm is expected to earn $5.94 per share this year and to pay a year-end dividend of $3.70, and it finances only with common equity.
If investors require a 9% return, what is the expected growth rate? Round your answer to two decimal places. Do not round your intermediate calculations. %
If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS? (Hint: g = (1 - Payout rate)(ROE).) Round your answer to the nearest cent. Do not round your intermediate calculations. $ per share.
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