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Finding the dividend payout ratios for each firm

Constant-Growth Model. Here are data on two stocks, both of which have discount rates of 15%:

                              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 firm?

c. What is the proper stock price for each firm?

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Microeconomics: Finding the dividend payout ratios for each firm

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