Question: Common stock value Constant growth McCracken Roofing, Inc., common stock paid a dividend of $1.43 per share last year. The company expects earnings and dividends to grow at a rate of 8% per year for the foreseeable future.
a. What required rate of return for this stock would result in a price per share of $22
b. If McCracken expects both earnings and dividends to grow at an annual rate of 12%, what required rate of return would result in a price per share of $22?
a. The required rate of return for this stock, in order to result in a price per share of $22, is 15.02%. (Round to two decimal places.)
b. The required rate of return for this stock, in order to result in a price per share of $22, is ________% Round to two decimal places.)