What are the dividend payout ratios for each firm.
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19 Constant-Growth Model. Here are data on two stocks, both of which have discount rates of 15percent.
Stock A Stock B
Return on equity 15% 10%
Earnings per share $2.00 $1.50
Dividends per share $1.00 $1.00
What are the dividend payout ratios for each firm.
What are the expected dividend growth rates firm
what is the proper stock price for each firm
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a. What are the dividend payout ratios for each firm?
Pay out ratio = Dividend per share /Earning per share
Stock A= 1/2=.5 or 50%
Stock B= 1/1.5= .67 or 67%
b. What are ...
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