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The market consensus is that Comforter Furniture Corporation has an ROE =25%, a beta of 2, and plans to maintain indefinitely its traditional dividend payout

The market consensus is that Comforter Furniture Corporation has an ROE =25%, a beta of 2, and plans to maintain indefinitely its traditional dividend payout ratio of 50%. Trailing 12 months earnings are $4 per share. The annual dividend was just paid. The consensus estimate of the coming years market return is 11%, and T-bills currently offer a 5% return. Q1: What is the growth rate? _____(sample answer: 15.50%) Q2: What is the expected dividend next year?____ (sample answer: $1.50) Q3: What is the required rate of return for equity?____ (sample answer: 15.50%) Q4: What is the value of the company? ______(sample answer: $1.50) Q5: Suppose the companys management decides to increase the dividend payout ratio. Will increasing dividends help increase the stock price?____ (sample answer: Yes or No)

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