Expected to maintain three percent growth rate forever

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1. Wonder Trees Inc. expects to pay the next dividend payment of $4.5 per share (D1). The company is expected to maintain a 3 percent growth rate forever. If the company stock currently sells for $34 per share, the required return should be ______ percent. Express in percentage without the % sign, and round it to two decimal places, e.g., 13.45.

2. Sky High Co. just paid a dividend of $2.2 per share on its stock. The dividends are expected to grow at a constant rate of 2 percent per year indefinitely. If investors require an 11.4 percent return on Sky High Co. stock, the current price is $ _________ . Round it to two decimal places, and do not include the $ sign, e.g., 23.56.

Reference no: EM131863136

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