What is the sustainable growth rate

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Questions -

Q1. Consider a stock that will have price of $40.7 one year from now and pay a dividend of $1.18 in one year. The expected rate of return is 5.6%. What is the current price of the stock?

Q2. Consider a stock that will have dividends in the next three periods of $1.68, $1.93, and $2.01, respectively. The interest rate is 13%. What is the growth rate of the dividend in period 3? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Q3. Stark Industries expects an earnings per share of $1.57 and reinvests 40% of its earnings. Management projects a rate of return of 14% on new projects and investors expect a 9% rate of return on the stock. What is the sustainable growth rate? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Q4. A stock has a return on equity of 16.5% and a plowback ratio of 50%. What is the sustainable growth rate? Enter you answer as a percentage. Do not include the percentage sign in your answer.

Reference no: EM132997699

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