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 $ 3.40 $ 2.70
Dividends per share $ 1.70 $ 1.70
a. What are the dividend payout ratios for each firm? (Enter your answers as a percent rounded to 2 decimal places.)
b. What are the expected dividend growth rates for each firm? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
c. What is the proper stock price for each firm? (Do not round intermediate calculations. Round your answers to 2 decimal places.)