Here are data on two stocks, both of which have discount rates (required return on equity) of 14%. Dividends are expected amounts for the coming year. Stock A Stock B Return on equity (ROE) 14 % 12 % Earnings per share $ 2.80 $ 2.00 Dividends per share $ 1.40 $ 1.40 a. What are the dividend payout ratios for each firm? (Enter your answers as a percent rounded to 2 decimal places.) b. What are the expected dividend growth rates for each stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. What is the proper stock price for each firm? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Prev Question 4 of 8 Total4 of 8
Here are data on two stocks, both of which have discount rates (required return on equity) of 14%. Dividends are expected amounts for the coming year. Stock A Stock B Return on equity (ROE) 14 % 12 % Earnings per share $ 2.80 $ 2.00 Dividends per share $ 1.40 $ 1.40 a. What are the dividend payout ratios for each firm? (Enter your answers as a percent rounded to 2 decimal places.) b. What are the expected dividend growth rates for each stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. What is the proper stock price for each firm? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Prev Question 4 of 8 Total4 of 8
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Here are data on two stocks, both of which have discount
| Stock A | Stock B | |||||
| Return on equity ( |
14 | % | 12 | % | ||
| Earnings per share | $ | 2.80 | $ | 2.00 | ||
| Dividends per share | $ | 1.40 | $ | 1.40 | ||
a. What are the dividend payout ratios for each firm? (Enter your answers as a percent rounded to 2 decimal places.)
b. What are the expected
c. What is the proper stock price for each firm? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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