Question: Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (P/E1). c. What is the stock price using the P/E

Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (P/E1). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? e. What would happen to the P/E ratio (P/E1) and stock price if the firm could earn 22 percent on reinvested earnings (ROE)? f. What does this tell you about the relationship between the rate the firm can earn on reinvested earnings and P/E ratios? a. What is the expected growth rate for dividends? * (Round to two decimal places.) b. What is the price earnings ratio (P/E1) ? (Round to three decimal places.) c. What is the stock price using the P/E ratio valuation method? (Round to the nearest cent.) d. What is the stock price using the dividend discount model? (Round to the nearest cent) e. Using the dividend discount model, what would be the stock price If the firm could eamn 22% on reinvested eamings (ROE)? (Round to the nearest cent.) What would be the P/E ratio (P/E E1 ) If the firm could earn 22% on roinvested eamings (ROE)? (Round to three decimal places.) f. What does this tell you about the relationship between the rate the firm can earn on reinvested eamings and P.E ratios? (Select from the drop-down menus.) The higher the ROE, other things being the same, the the value of the common stock and thus the the price earnings rato, P/E

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