Problem $7-17$ Constant$-$Growth Model $($LO$2)$

Eastern Electric currently pays a dividend of $$1\mathrm{.}64$ per share and sells for $$27$ a share.

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a$.$ If investors believe the growth rate of dividends is $3\%$ per year, what rate of return do they expect to earn on the stock? $($Do not round intermediate calculations. Enter your answer as a percent rounded to $2$ decimal places.$)$

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b$.$ If investors' required rate of return is $10\%,$ what must be the growth rate they expect of the firm? $($Do not round intermediate calculations. Enter your answer as a percent rounded to $2$ decimal places.$)$

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c$.$ If the sustainable growth rate is $5\%$ and the plowback ratio is $0\mathrm{.}4,$ what must be the rate of return earned by the firm on its new investments? $($Enter your answer as a percent rounded to $2$ decimal places.$)$

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