required an 11 per cent rate of return? 2 (a) The Belle Beauty Company (BBC) earned 10 a share last year and paid a dividend of 6 a share. Next year, you expect BBC to earn 11 and continue its payout ratio. Assume that you expect to sell the stock for 132 a year from now. If you require 12 per cent on this stock, how much would you be willing to pay for it? (b) Given the expected earnings and dividend pay- ments if you expect a selling price of 110 and require an 8 per cent return on this investment, how much would you pay for the BBC stock? (c) Over the long run, you expect dividends for BBC to grow at 8 per cent and you require 11 per cent on the stock. Using the infinite period DDM, how much would you pay for this stock? (d) Based on new information regarding the popularity of beauty products, you revise your growth estimate for BBC to 9 per cent. What is the maximum P/E ratio you will apply to BBC, and what is the maximum price you will pay for the stock