Question: 12. Johnson and Johnson had a return on equity in 2020 of 31.4% and paid out 36% of its earnings as dividends. It earned a

12. Johnson and Johnson had a return on equity in 2020

12. Johnson and Johnson had a return on equity in 2020 of 31.4% and paid out 36% of its earnings as dividends. It earned a net income of $1.625 million on a book value of equity of $5.171 million. As a consequence of the COVID pandemic, the return on equity is expected to drop to 25% in 2021 and that the dividend payout ratio will remain unchanged. A. Estimate the growth rate in earnings based upon 2020 numbers. B. Estimate the growth rate in when the ROE drops from 31.4% to 25%

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