What rate of return do they expect to earn on the stock

Assignment Help Financial Management

Reference no: EM131902364

Eastern Electric currently pays a dividend of about $1.71 per share and sells for $46 a share.

a. If investors believe the growth rate of dividends is 6% 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: EM131902364

Questions Cloud

Specify the levels of demand for each processing alternative : Zodiac Furniture is considering the production of a new line of metal office chairs. The chairs can be produced in-house using either process A or process B.

Home theater surround sound? system : Camerin wants a new big screen TV and home theater surround sound? system, Assuming Camerin accepts the? store's financing, his monthly payment will be ??$

Sausage system with installed cost : Dog Up! Franks is looking at a new sausage system with an installed cost of $512068. what is the NPV of this project?

Diversified public company with nationwide interests : Ramey Corporation is a diversified public company with nationwide interests in commercial real estate development, banking, copper mining, and metal fabrication

What rate of return do they expect to earn on the stock : If investors believe the growth rate of dividends is 6% per year, what rate of return do they expect to earn on the stock?

Calculate the capacities of all resources : Zeynep and her roommate decided to open a late-night snack business, which they named Zeyno's Cookie Company (ZCC). The following steps outline the order.

What is the revenue at the break-even quantity : Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional use.

Manually calculate returns-standard deviations-covariance : Manually calculate returns, standard deviations, covariance, and correlation coefficient using the formulas illustrated on PowerPoint slides.

Choose answer and explain why you choose that answer : Choose only one answer and explain why you choose that answer. In this answer you must also provide TWO examples using the concept of ZOPA.

User Account

All Pages