TechWorks Inc. has a 9 percent return on equity and retains 60 percent of its earnings for reinvestment purposes. It recently paid a dividend of $2.50, and the stock is currently selling for $35. a. What is the growth rate for TechWorks Inc.? b. What is the expected return for TechWorks' stock?
TechWorks Inc. has a 9 percent return on equity and retains 60 percent of its earnings for reinvestment purposes. It recently paid a dividend of $2.50, and the stock is currently selling for $35. a. What is the growth rate for TechWorks Inc.? b. What is the expected return for TechWorks' stock?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 5MC
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Transcribed Image Text:TechWorks Inc. has a 9 percent return on equity and retains 60 percent of its
earnings for reinvestment purposes. It recently paid a dividend of $2.50, and
the stock is currently selling for $35.
a. What is the growth rate for TechWorks Inc.?
b. What is the expected return for TechWorks' stock?
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