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Determining the constant growth

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Constant growth

McCracken? Roofing, Inc., common stock paid a dividend of ?$1.08 per share last year. The company expects earnings and dividends to grow at a rate of 8?% per year for the foreseeable future.

a. What required rate of return for this stock would result in a price per share of ?$30??

b. If McCracken expects both earnings and dividends to grow at an annual rate of 12?%, what required rate of return would result in a price per share of ?$30??

Reference no: EM131983378

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