Sidman Products common stock currently sells for $60.00 a share. The firm is expected to earn $5.40

Question:

Sidman Products’ common stock currently sells for $60.00 a share. The firm is expected to earn $5.40 per share this year and to pay a year-end dividend of $3.60, and it finances only 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 years’ EPS?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...