Spencer Supplies' stock is currently selling for $60 a share. The firm is expected to earn $5.70 per share this year and to pay a year-end dividend of $3.40.

1. If investors require a 9.5% return, what rate of growth must be expected for Spencer? Round your answer to two decimal places.

%

1. If Spencer reinvests earnings in projects with average returns equal to the stock's expected rate of return, then what will be next year's EPS? (Hint: g_L = ROE Retention ratio.) Do not round intermediate calculations. Round your answer to the nearest cent.

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