A firm pays a $1.50 dividend at the end of year one (D1), has a stock price

Question:

A firm pays a $1.50 at the end of year one (D1), has a stock price of $155 (P0), and a constant growth rate (g) of 10 percent.
a. Compute the required rate of return (Ke).
Indicate whether each of the following changes would make the required rate of return (Ke) go up or down. (Each question is separate from the others. That is, assume only one variable changes at a time.) No actual numbers are necessary.
b. The payment increases.
c. The expected growth rate increases.
d. The stock price increases.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...