Here are forecasts for next year for two stocks: Stock A Stock B Return on equity 18 % 12 % Earnings per share $ 2.00 $ 1.50 Dividends per share $ 1.00 $ 1.00 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.) 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.) c. If investors require a return of 18% on each stock, what are their values? (Do not round intermediate calculations. Round final answers to 2 decimal places.)
Here are forecasts for next year for two stocks: Stock A Stock B Return on equity 18 % 12 % Earnings per share $ 2.00 $ 1.50 Dividends per share $ 1.00 $ 1.00 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.) 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.) c. If investors require a return of 18% on each stock, what are their values? (Do not round intermediate calculations. Round final answers to 2 decimal places.)
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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Here are
|
Stock A |
Stock B |
|||||
| 18 | % | 12 | % | |||
| Earnings per share | $ | 2.00 | $ | 1.50 | ||
| Dividends per share | $ | 1.00 | $ | 1.00 | ||
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.)
b. What are the expected
c. If investors require a return of 18% on each stock, what are their values? (Do not round intermediate calculations. Round final answers to 2 decimal places.)
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