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Required: a. Computer stocks currently provide an expected rate of return of 16%.MBI, a large computer company, will pay a year-end dividend of $4 per
Required: a. Computer stocks currently provide an expected rate of return of 16%.MBI, a large computer company, will pay a year-end dividend of $4 per share. If the stock is selling at $50 per share, what must be the market's expectation of the growth rate of MBI dividends? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If dividend growth forecasts for MBI are revised downward to 6% per year, what will be the price of the MBI stock? (Round your answer to 2 decimal places.) c. What (qualitatively) will happen to the company's price-earnings ratio? The P/E ratio will increase. The P/E ratio will decrease
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