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What are the dividend payout ratios for firm

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Reference no: EM133000726

Here are forecasts for next year for two stocks:

Stock A Stock B

Return on equity 15% 10%

Earnings per share $2.00 $1.50

Dividends per share $1.00 $1.00

a. What are the dividend payout ratios for each firm?

b. What are the expected dividend growth rates for each stock? Assume dividend has a steady growth for both stocks.

c. If investors require a return of 15% on each stock, what are their values?

Reference no: EM133000726

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