What rate of return do they expect to earn on stock

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Reference no: EM131908806

Eastern Electric currently pays a dividend of about $1.76 per share and sells for $26 a share. a. If investors believe the growth rate of dividends is 5% per year, what rate of return do they expect to earn on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return % b. If investors' required rate of return is 12%, what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Growth rate % c. If the sustainable growth rate is 6% and the plowback ratio is .4, what must be the rate of return earned by the firm on its new investments? (Enter your answer as a percent rounded to 2 decimal places.) Rate of return %

Reference no: EM131908806

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