Sidman Products common stocks prevailing price is $ 60 per share. The firm expects to earn $5.40 per share this year, and to pay a year - end dividend of $ 3.60. The firm is financed 100% with common equity.

(a) If investors require a 9% return, what is the expected growth rate?

(b) 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?