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Calculate the company growth rate in future earnings

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Question - Q1) The dividend for Annen's ordinary shares is expected to be $1.20 next year. This dividend is expected to grow at a rate of 6% for the following two years, after which is expected to grow at 4% each year for the foreseeable future. If the required rate of return on these shares is 12%, what is the approximate current value of the firm's shares?

Q2) Hawk Co. retains 30% of its earnings each year for reinvestment and earns a 12% rate of return on these funds. If the company anticipates a dividend of $5 to be paid at the end of the year and the required rate of return is 14%,

(a) Calculate the company's growth rate in future earnings.

(b) Calculate the value of Hawk shares.

Reference no: EM133045849

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