Question: Starting at date 1 , JC Penney is expected to pay out 4 0 % of its earnings and to earn an average return of

Starting at date 1, JC Penney is expected to pay out 40% of its earnings and to earn an average return of 15% per year on its incremental reinvested earnings forever. Stocks with similar risk are currently priced to provide a 12% expected return.What is the expected rate of growth in JC Penneys earnings?What is the expected rate of growth in JC Penneys dividends? What is the P/E ratio for the stock?

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