Here are forecasts for next year for two stocks:
| Stock A | Stock B |
| Return on equity | | 12 | % | | 10 | % |
| Earnings per share | $ | 3.00 | | $ | 2.50 | |
| Dividends per share | $ | 2.00 | | $ | 2.00 | |
|
a. What are the dividend payout ratios for eachfirm? (Do not round intermediate calculations. Enter youranswers as a percent rounded to the nearest wholenumber.)
Payout Rate
Stock A: ____%
Stock B: _____%
b. What are the expected dividend growth rates foreach stock? Assume dividend has a steady growth for both stocks.(Do not round intermediate calculations. Enter your answersas a percent rounded to 2 decimal places.)
Growth Rate
Stock A: _____%
Stock B:_____%
c. If investors require a return of 12% on eachstock, what are their values? (Do not round intermediatecalculations. Round final answers to 2 decimalplaces.)
PV
Stock A: _____%
Stock B:_____%
