Steady As She Goes Inc. will pay a year-end dividend of $2.00 per share. Investors expect the dividend to grow at a rate of 6% indefinitely.
a. If the stock currently sells for $20 per share, what is the expected rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a whole percent.)
Expected rate of return
b. If the expected rate of return on the stock is 18.5%, what is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Stock price