Earnings-dividends share are expected to grow indefinitely

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1. Company Z's earnings and dividends per share are expected to grow indefinitely by 5.5% a year. If next year's dividend is $11 and the market capitalization rate (or cost of equity = r) is 7.5%, what is the current stock price?

2. Northwest Natural Gas stock was selling for $42.1 per share at the start of 2015. Dividend payments for the next year were expected to be $2.7 a share. What is the expected return (r), assuming a growth rate of 5.7%?

Reference no: EM131989962

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