In: Finance
Here are forecasts for next year for two stocks:
Stock A |
Stock B |
|||||
Return on equity | 12 | % | 10 | % | ||
Earnings per share | $ | 3.00 | $ | 2.50 | ||
Dividends per share | $ | 2.00 | $ | 2.00 | ||
a. What are the dividend payout ratios for each firm? (Do not round intermediate calculations. Enter your answers as a percent rounded to the nearest whole number.)
Payout Rate
Stock A: ____%
Stock B: _____%
b. What are the expected dividend growth rates for
each stock? Assume dividend has a steady growth for both stocks.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places.)
Growth Rate
Stock A: _____%
Stock B:_____%
c. If investors require a return of 12% on each
stock, what are their values? (Do not round intermediate
calculations. Round final answers to 2 decimal
places.)
PV
Stock A: _____%
Stock B:_____%