Eastern Electric currently pays a dividend of $1.69 per share and sells for $24 a share. a.
Fantastic news! We've Found the answer you've been seeking!
Question:
Eastern Electric currently pays a dividend of $1.69 per share and sells for $24 a share.
a. If investors believe the growth rate of dividends is 2% per year, what rate of return do they expect to earn on the stock?
b. If investors' required rate of return is 12%, what must be the growth rate they expect of the firm?
c. If the sustainable growth rate is 3% and the plowback ratio is 0.3 , what must be the rate of return earned by the firm on its new investments?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
Posted Date: