Average return is equal to stock expected rate of return

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Reference no: EM132039276

Sidman Products's common stock currently sells for $40 a share. The firm is expected to earn $3.60 per share this year and to pay a year-end dividend of $2.20, and it finances only with common equity. If investors require a 9% return, what is the expected growth rate? Round your answer to two decimal places. Do not round your intermediate calculations. % If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS? (Hint: g = (1 – Payout ratio)ROE). Round your answer to the nearest cent. Do not round your intermediate calculations. $ per share.

Reference no: EM132039276

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