Here are data on two stocks, both of which have discount rates of 15%:
Stock A Stock B
Return on equity 15 % 12 %
Earnings per share $ 3.00 $ 2.30 Dividends per share $ 1.80 $ 1.80 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.)