What must be growth rate they expect of the firm

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Reference no: EM13917375

Eastern Electric currently pays a dividend of about $1.72 per share and sells for $31 a share.

a. If investors believe the growth rate of dividends is 3% per year, what is the opportunity cost of capital? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Cost of Capital %

b. If investors' opportunity cost of capital is 10%, what must be the growth rate they expect of the firm?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Growth rate %

c. If the sustainable growth rate is 7% and the plowback ratio is .5, what must be the return on equity ROE? (Round your answer to 2 decimal places.)

ROE %

Reference no: EM13917375

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